Trump May Ban German Luxury Car Imports

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According to German business publication Wirtschaftswoche, the Trump administration may set large tariffs on German luxury cars. That would be a huge blow to companies like BMW and Mercedes that count on sales in the United States for their global success.

A translation of the lede of the article, using Google Translate:

US President Donald Trump has announced to French President Emmanuel Macron to exclude German premium car makers from the US market. On Macron’s visit to Washington in April, Trump said he would maintain his trade policy until no Mercedes models rolled on Fifth Avenue in New York. This reports the WirtschaftsWoche, citing several diplomats from Europe and the United States.

There is no report on how large the tariffs may be or when they might start, though an outright ban seems unlikely. The president has said he will levy tariffs on other car imports, and some of these will be as high as 25% and will include car parts.

BMW sold 73,835 cars and light trucks in the United States in the first quarter. Mercedes sold 86,660. Presumably, any ban would also include Audi, which sold 50,052 over the same period. However, many of these were made or assembled in the United States and presumably will not be affected.

German car companies may have sales of some models that are higher in China than the United States. The same is true in their home market. However, the German luxury car foothold in the United States is tremendous. Only Toyota’s Lexus luxury brand rivals BMW and Mercedes in unit sales. They dwarf sales of the two U.S. luxury models: Cadillac and Lincoln.

A large tariff on German luxury car imports could reorder the ranking of sales in the United States. It may even help the two U.S. brands. In the meantime, the preferred brands by U.S. drivers could have prices that put many of them out of reach.