President Trump has reassured German auto executives he had no immediate plans to impose tariffs on their cars, a US media report said.
He made the pledge in a meeting at the White House — hours after declaring himself a “Tariff Man” in a Twitter post, the New York Times reported.
The report said the hastily organised meeting included representatives of BMW, Daimler and Volkswagen. In Europe, there is a growing sense of dread that Trump will follow through on his repeated threats to impose tariffs of 25% on imported cars and car parts if European automakers do not expand their operations in the United States.
According to the paper, the German carmakers described the talks as friendly, even if they produced no concrete result. Participants in the meeting said the risk of punitive tariffs on German cars seemed to have receded, at least for the moment.
“All signs are guiding to the right direction at the moment,” Peik von Bestenbostel, the chief spokesman for Volkswagen, who accompanied Herbert Diess, the chief executive, to Washington, told the New York Times. He added: “Nobody knows what the decision of the president may be.”
Joerg Howe, Daimler’s director of communications, who was in Washington with CEO Dieter Zetsche, described the atmosphere as “really good.”
Trump was cordial, and played down the risk of imposing tariffs quickly, administration officials and industry executives told the paper. A White House spokeswoman said no long-term decisions had been made, describing the meeting as a discussion of how to create “a more friendly business environment”.
Each of the automakers met separately with cabinet officials, and highlighted commitments to create more jobs for American workers, the NYT report said.
Only Volkswagen executives offered something new, saying the company was considering building a factory in the United States in addition to its existing plant in Chattanooga, Tennessee. Volkswagen is also in talks with Ford about cooperating to build commercial light trucks, and possibly sharing the cost of new technologies, a company spokesman told the paper.
Since General Motors’ announcement last month that it would idle five factories in North America, the White House, already juggling complex and uncertain trade negotiations with China, Mexico and Canada, has shown a diminishing interest in escalating trade tensions with Europe, according to several senior administration officials who spoke to the New York Times.
The president is also concerned that if tariffs are imposed, German carmakers may retaliate by cutting jobs at their existing American plants, many of which are in states he won in the 2016 election. Several of his top advisers, including Larry Kudlow, the director of the National Economic Council, have urged him to back off his tariff threat, the report said.
Yet Trump could ultimately call for the levies if he does not think Europe is negotiating a trade deal in good faith.
The Commerce Department has been working on a report that could provide the legal basis for such tariffs, and the administration would most likely challenge the automakers to provide reasons they should not be imposed, Peter Chase, a former American diplomat and a senior fellow at the German Marshall Fund of the United States in Brussels, told the paper.
“They will say, ‘What can we do to achieve the goals the president has without going down this road?'” Chase said.
The NYT noted BMW, Daimler and Volkswagen already build hundreds of thousands of cars in Alabama, South Carolina and Tennessee. In recent weeks, the companies have dangled the prospect of additional investments. BMW has said it could start building motors in the US instead of importing them from Germany. Volkswagen has indicated it might manufacture electric cars in the US.
But the automakers will not want to commit to opening new production lines unless the administration offers some certainty in return. To justify investments of billions of dollars, the car companies need assurances that American policy will not suddenly veer back into attack mode, the report said.
BMW’s factory in Spartanburg, South Carolina, is the company’s biggest production facility anywhere in the world. It built about 370,000 SUVs last year, of which about 68,000 were exported to China. BMW is the leading exporter of American-made vehicles to China.
But China’s punitive tariffs on American-made cars hit BMW as well as Daimler hard, cutting into sales of cars made in the Deep South — areas that voted heavily for Trump, the NYT added.