German Vice Chancellor Sigmar Gabriel hit back Monday after President-elect Donald Trump threatened tax hikes for automakers who produce outside the U.S., warning that the move would hurt the American auto industry instead of making it stronger.
The Guardian reports that Gabriel, cited in the German daily Bild, warned of a “bad awakening” if overseas manufacturers were subject to Trump’s proposed 35% border tariff on importing cars made in Mexico to the U.S.
“I believe it would make the U.S. car industry weaker, worse and above all more expensive,” Gabriel, who also serves as Germany’s economics minister, was quoted by the Guardian as saying. “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 reportedly praised Germany’s automakers, but said that Germans were not reciprocating by purchasing cars made in the U.S., making the trade unfair. To this Gabriel replied with a challenge to American auto manufacturers: “the U.S. needs to build better cars.”
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The President-elect’s comments were made in an interview with Bild and the Times of London on Sunday, during which he offered a number of abrasive remarks about the German government. While proclaiming that he respects and likes German Chancellor Angela Merkel, he referred to her migrant policy as a “catastrophic mistake.”
Trump focused much of his campaign rhetoric on revamping the U.S. manufacturing sector, and in recent weeks has ramped up his campaign to get American automakers to move plants in Mexico back to U.S. soil. Ford (F) and General Motors (GM) are among the companies that have scrapped plans for new factories across the border after Trump threatened to levy a “big border tax.”
Germany’s Volkswagen (VLKAY), BMW (BMWYY) and Daimler (DDAIF)—the maker of Mercedez-Benz—all operate existing factories south of the border. BMW recently vowed to stay the course by opening a new facility in Mexico as planned, while pledging a fresh $1 billion investment in its plant in South Carolina.