The US car giant GM plans massive job cuts – also because of rising costs due to higher import duties on steel. Donald Trump provoke Boomerang effects, says the trade expert Stefan Kooths in the DW-interview.
Deutsche Welle: With the announcement of the deletion of the 15,000 Jobs, General Motors (GM) has drawn the IRE of U.S. President Donald Trump. An important reason for the austerity forced by General Motors to be rising costs through the Trump increased import duties on steel. The President is now a victim of his own policy of isolation?
Stefan Kooths: you can see it that way. We had alerted early to the fact that these measures – for example, the protectionism in steel and Aluminium range – spread very quickly to other industries in the own country. At the end of the day, the American economy suffers as well under such penalties as the rest of the world. World economically, you cut yourself off useful avenues of cooperation.
Stefan Kooths from the Kiel Institute for the world economy
Thus all the poorer, and the American automotive industry is also a victim of US protectionism.
The problems of GM will not go back for sure only to the higher steel prices. You also have something to do with the model range needs to be readjusted. As some managers make it is now to easy to push all the duties. But clearly, the negative Boomerang effects, the meet the own economy.
Already before the plans of General Motors have been known to Trump German car bosses of VW, Daimler and BMW are invited to negotiate directly with them via punitive tariffs and jobs in the United States. Has become so a Meeting after the announcement of General Motors is now less likely?
Now that would be crystal-ball gazing. If such conversations come about, you have to see. It can’t hurt in any case, if one speaks in Washington. You can’t negotiate, of course, on customs duties, the US can side with the European Union. But the German auto industry could make the US President’s clear that the Americans in its entirety is by no means a victim of the auto trade.
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Car Association is afraid of punitive tariffs
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Car Association is afraid of punitive tariffs
The all-terrain vehicle models from Daimler, and BMW are built in American plants. BMW is the biggest Auto exporter in the United States. To put these facts on the table, may or may not contribute to the US President looks longer in the role of a victim. Such a discussion would relax of the relations.
What goals could be targeting Trump with such a Meeting? He knows that his interlocutor, the German car bosses, no official negotiating mandate?
May be he has something in the back of the head, the tried, the Americans, in the 1980s, with the Japanese car industry: the ‘voluntary export restrictions’. One side says less exports, the other side takes back potential threats. This has been a very bad deal for the Americans, because in the end, it only meant that the Japanese manufacturers were able to charge higher prices for American consumers. The bill, therefore, have paid the American. You should therefore learn from your bad experiences and not again in the same trap.
It is supposed to have on the part of the EU, the offer will be given to lower the import duties for cars to zero, if the USA follow suit. Why is not enough for the Trump, as is rumored?
It is difficult to assess what Mr Trump’s concerns. He may have been surprised by this offer. Because his entire rhetoric would be wiped, the Europeans were, on the whole unfair trading partner, from the table. I think that is a very clever move on the European side, to make this offer. We have recommended from the beginning.
You can also go further and say that we negotiate on a full Tariff elimination in the TRANS-Atlantic trade, not only in the vehicles. That would take the Trump campaign is a lot of Wind out of the sails.
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Trade expert Stefan Kooths about Trumps problems with the car industry – MP3-Stereo
Could Trump hesitation because it is in the large Pick-up Trucks that are in the USA, best sellers, just the opposite? In the Segment of large flatbed trucks of the US import tariff of 25 percent is much higher than its European counterpart. This should fall, that would be perhaps an invitation not only for German manufacturers in this segment of the market active?
Of the European car industry, the Americans had to fear in this Segment. These vehicles are built here in Europe and the providers that manufacture them, sitting with their production facilities more likely to be in Mexico or in other countries.
Conversely, there is not in the European Union, the vehement advocate of free trade. Why do we have all customs duties on imports of ordinary passenger Cars from the USA? The products of the U.S. auto industry fit but hardly to the European market. The import duties on passenger Cars we have, because some countries in the EU want a shield in front of the Asian competition, not in front of the American.
Therefore, the protectionist stand of the most and will also be in the way. And in the TRANS-Atlantic trade, the conflict conjured up, is not there according to the actual market conditions at all.
To a possible Meeting between Trump and German car manufacturers, it is still a further theory: according to this, the US President, the German manufacturer wants to put pressure on you to be in Berlin and Brussels with the competent politicians make representations and the pressure. How likely do you think this idea?
That’s as may be. Especially since Trump has probably made the experience, that the greatest pressure against his trade policy comes from the company’s own ranks. It probably impressed a lot more than all the threats from the European side. However, the European vehicle industry should not embark on such a game. You can lose only.
Stefan Kooths head of the forecasting centre at the Kiel Institute for the world economy (IfW). Among his research foci are international trade relations.
The conversation, Klaus, Ulrich.
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