When a country throws up trade barriers, other nations retaliate. Wolf Richter is being too kind using the word “unwittingly.” Donald Trump is a smart man, he certainly knows about the risks of retaliation. From Richter at wolfstreet.com:
Other US companies are equally vulnerable.
Boeing’s airliner business is in a slump. Serial large-scale layoffs of engineers and production workers have been percolating through its operations since early 2016, with another big wave announced a week ago, as net orders have collapsed 53% from 2014, to a seven-year low. The last thing Boeing needs is help from President Elect Trump to speed up the process.
But that’s what might happen next if the trade and investment policies proffered by Trump become reality after his inauguration.
In an interview published on Monday in the German tabloid Bild, Trump threatened BMW, Daimler, and Volkswagen with a 35% tax on imported vehicles, which would make them very expensive for US consumers. The automakers and their dealers would respond by cutting their margins, but it might not be enough to stem a large sales decline.
The three companies already have assembly plants, research & development offices, and logistics operations in the US, including:
• BMW has a manufacturing plant in Spartanburg, South Carolina; with the $1 billion expansion announced in 2014, the plant would become BMW’s largest in the world.
• Daimler has bought into the US heavy truck business (Detroit Diesel, Freightliner, Thomas Built Buses, etc.) and has those manufacturing plants in the US. Plus it has a passenger vehicle assembly plant near Vance, Alabama.
• Volkswagen has a manufacturing plant in Chattanooga, Tennessee.
As global manufacturers, they all have plants scattered around the world. So Trump:
“If you want to build cars in the world, then I wish you all the best. You can build cars for the United States, but for every car that comes to the USA, you will pay 35% tax,” he said, which Bild translated into German, which Reuters translated into English.
To continue reading: How Trump Could Unwittingly Gut Boeing’s Global Business
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