Tariff threats seem to ignore the fact that in the heart of Trump Country, German automakers have established auto assembly plants and clusters of parts suppliers.

Share story

The Trump protection racket continues with a threat to impose tariffs on autos imported from the EU (“Hey, Germany, nice auto industry you got there. Shame if something happened to it.”).

This comes in response to EU warnings that it would impose retaliatory tariffs on U.S. goods if the Trump administration goes ahead with its duties on imported steel. American products from motorcycles and ladders to liquor could be affected — for a nation supposedly being screwed by the world trade system, it’s amazing how much we sell overseas. In general, tariffs on U.S. products into the EU are very low.

This is how trade wars start, and nobody wins but some politically connected special interests. In addition, Trump continues to antagonize American allies (while China, a proclaimed target, accounts for a very small portion of U.S. steel imports). But it gets worse.

In the heart of Trump Country, German automakers have established auto assembly plants and clusters of parts suppliers.

BMW opened its first American assembly in 1993, in Greer, S.C., near Greenville. It was the product of assiduous state courting and incentives, but proved a hit. Interstate 85 is nicknamed “the Autobahn” because of the hundreds of suppliers nearby.

Mercedes-Benz opened an assembly on state-donated land outside Birmingham, Ala., in 1997. In 2011, Volkswagen dedicated an assembly in Chattanooga, Tenn. Mercedes-Benz Vans is building a factory in North Charleston, S.C.

Thus, many German cars on the road here are made in America, by Americans, and would be free from tariffs. That doesn’t mean the European automakers wouldn’t think twice about making further investment in U.S. plants if tit-for-tat became a trade war. When this unhinged president says, “We’re gonna tax BMW” — does he mean in Germany or South Carolina? Does he even know? The consequences are either empty rhetoric or destructive.

——————————

Today’s Econ Haiku:

Northgate Mall, the first

When happy driving was big

Soon, ready for rail

——————————