U.S. should build better cars, says German economy minister

Germany’s economy minister tells Americans to ‘build better cars’ in response to Trump assertions he will hit German carmakers with a 35 percent U.S. import tariff.

SAARBRUECKEN, GERMANY (JANUARY 16, 2017) (REUTERS) – Germany’s Economy Minister Sigmar Gabriel hit back on Monday (January 16) at threats by U.S. president-elect Donald Trump he would penalise German imports by telling the Americans to ‘build better American cars.’

Trump warned German car companies he would impose a border tax of 35 percent on vehicles imported to the U.S. market, a plan that drew sharp rebukes from Berlin and hit the automakers’ shares.

In an interview with German newspaper Bild, published on Monday, Trump criticized German carmakers such as BMW, Daimler and Volkswagen for failing to produce more cars on U.S. soil.

But Gabriel said Germany’s automobile industry can afford to be “relaxed” and “self-confident” in reaction to Trump’s statements.

“I think that the automobile industry in the U.S. will quickly notice that they have a lot of suppliers who are not based in the U.S. and then U.S. cars will become really quite expensive. And most likely less good. I think we have reasons to be confident in ourselves. We have an excellent automobile industry. We are a strong location. Our exports to the U.S. are a whole 10 percent. 60 percent of our exports are to Europe. I think we can afford to be quite relaxed and self-confident and that would be the right thing at the moment,” Gabriel said on the sidelines of a meeting in Saarbruecken.

“My advice is to build better American cars, then maybe someone will buy them,” he added.

Under pressure to deliver on campaign promises to revive U.S. industrial jobs, Trump has turned his fire on carmakers that use low-cost Mexican plants to serve the U.S. market.

He has also warned Japan’s Toyota it could be subject to a “big border tax” if it builds its Corolla cars for the U.S. market at a planned factory in Mexico.

All three German carmakers have invested heavily in Mexico, but also pointed out on Monday that they manufacture in the United States as well.

“Of course we take the comments of the president-elect of the U.S. seriously. But there is the saying in politics: nothing is eaten as hot as it’s cooked. Every large legal measure has to go through the American Congress. It has to find a majority with senators and representatives. And it is very well known that the German car industry in the U.S. doesn’t just sell cars that are made in Europe but that production in the U.S. has risen significantly in the last 7 to 8 years,” president of the German Association of the Automotive industry. Matthias Wissmann said.

A competition of protectionism would make us all weaker and leave no one stronger. I hope that this is what rings out when people are thinking this through,” he added.