President Trump as soon as Thursday will announce a total ban on the sale of German luxury cars in America, and will also extend his steel and aluminum tariffs to top us trade partners, including Canada and Mexico.
The news follows reports that the Trump administration is thinking of imposing a 25% tariff on cars imported to the U.S. Currently, German carmakers control 90% of America's luxury auto market, meaning any tariffs imposed could be devastating for their companies. Before being elected, he reportedly owned several Mercedes, and photos have shown him driving a Rolls-Royce - a product of BMW.
Volkswagen was not immediately available for comment when contacted by CNBC Thursday, while Daimler refused to issue a statement. An exclusive report from German magazine WirtschaftsWoche cites several unnamed USA and European diplomats. "I love free trade, but it must be a smart trade for me to call it fair".
European Union passenger auto imports from the United States were worth 6.2 billion euros ($7.3 billion) past year, while the bloc's US exports topped 37 billion euros, according to Brussels-based industry association ACEA.
However, German brands also have huge factories in the United States, where they built 804,000 cars previous year, VDA said, providing jobs for US workers. In 2017, German automakers assembled 804,000 cars in United States plants, exporting another 657,000 to North America, according to the VDA industry association.
Trump's auto tariff is a test of Franco-German solidarity since French carmakers have hardly any US sales, while German carmakers generate up to 30 percent of global sales there. The result could be a 25 percent tariff on foreign-made cars, similar to the result of the Section 232 investigation into steel and aluminum imports. Shares of Daimler, Porsche and Volkswagen were all trading off around 1% on the news.