The U.S. President-elect Donald Trump sent out a clear warning to German car makers in an interview with German newspaper Bild, published on Monday.
Trump told Bild that if German carmakers continue to manufacture cars in Mexico rather than on U.S. soil, he would impose a border tax of 35 percent on vehicles imported to the U.S. market.
“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 percent tax,” Trump told the German newspaper.
“I would tell BMW that if you are building a factory in Mexico and plan to sell cars to the USA, without a 35 percent tax, then you can forget that,” he added.
Head of Germany’s foreign affairs committee, Norbert Roettgen, said that Berlin needs to take Trump’s comments seriously.
“He seems to be absolutely focused on short-term job interests and security interests … not that he is looking for free trade so much, but more for protection,” said Roettgen.
Sigmar Gabriel, Germany’s deputy chancellor and minister for the economy, said on Monday morning said that a potential border tax would lead to a “bad awakening” among US carmakers since they were reliant on transatlantic supply chains.
“The US car industry would have a bad awakening if all the supply parts that aren’t being built in the US were to suddenly come with a 35% tariff. I believe it would make the US car industry weaker, worse and above all more expensive. I would wait and see what the Congress has to say about that, which is mostly full of people who want the opposite of Trump.”
Trump’s comments aren’t the first to take action against manufacturers who make cars in Mexico for export to the U.S.
Toyota Motor Corp. (TYO:7203), which plans to start producing cars at a new plant in Mexico, has said it’ll take Trump’s decisions into account in the future. Ford Motor Co. (NYSE:F) has cancelled previous plans for a factory in Mexico, to instead expand an existing site in Michigan.
Volkswagen (ETR:VOW3) shares fell 2 percent, and shares in Daimler (FRA:DAI) and BMW (ETR:BMW) both fell 1.8 percent by 1033 GMT.