The planned meeting in Washington with BMW, Daimler and Volkswagen (VW) bosses on Tuesday is just the kind that Donald Trump likes.
The US president relished such high-level powwows when he fronted the television show “The Apprentice”, and he showed his taste for gatherings of this kind hadn’t dimmedearlier this year at the World Economic Forum in Davos when he sat in a much-publicized meeting with the bosses of several large corporations.
The bosses relayed their companies’ US achievements and plans to a purring Trump, who sat like a proud teacher, surveying the perfectly-executed homework of his devoted pupils.
The German car bosses will have also done their homework.
Daimler boss Dieter Zetsche can brag about the expansion of the group’s plant in Alabama, where an extra $1 billion (€877 million) has been pumped in. The plant already employs 4,000 people.
Herbert Diess can emphasize VW’s plans to build electric cars in the US. The company already employs 3,500 people in Tennessee, with 1,000 more jobs to be added in 2019.
Donald Trump meeting with various CEOs and business leaders in Davos
And if BMW boss Harald Krüger had wanted, he could have gone to Washington to big up the fact that his company plans a new engine plant in the US, in addition to the large facility it already operates in South Carolina. Around 9,000 people work there, with another 12,000 employed as suppliers. However, Mr Krüger is not going to Washington — BMW CFO Nicolas Peter is there instead.
And together, the bosses can convey greetings from the German car industry as a whole. After all, as the German Association of the Automotive Industry (VDA) likes to emphasize, German carmakers and suppliers employ 118,000 in the US.
Being seen, if not heard?
Trump’s interest in the meeting is obvious. The great dealmaker himself wants to take credit for any investments that have been or will be made.
The whole event is “nothing more than a pompous show by Mr Trump to make headlines,” complained US economist Dennis Snower, President of the Kiel Institute for World Economics (IfW), in the Handelsblatt newspaper. “The CEOs have no authority to negotiate.”
Read more: Opinion: Donald Trump and his useless rage over General Motors
When the issue of the high tariffs levied on US cars entering the European Union (EU) is raised, as it surely will be, the German car bosses will be able to do little more than shrug their shoulders. The European Commission deals with trade and customs issues after all, not German carmakers.
Indeed, Angela Merkel was moved on Monday to point out that the meeting was not about trade issues.
And now, breathe
That all said, the meeting is not a bad idea, according to Stefan Kooths, trade expert at the IfW. “Talking to each other in Washington certainly can’t hurt,” Kooths told DW. It could help “relax relations” if the Germans can convince the US government “that Americans are not victims of car trafficking.”
The Germans can also point out that their activities help reduce the US trade deficit, by virtue of the fact that every fifth car they build in the US is sold to China.
Following the G20 summit in Buenos Aires at the weekend, Trump tweeted that “China has agreed to reduce and remove tariffs on cars coming into China from the US”. Beijing has yet to confirm this, but German car bosses would certainly welcome such a move.
The European visitors may refrain from mentioning in Washington that the Chinese market for their cars is far bigger and more important than the US one.Volkswagen sells 44 percent of its cars in China, compared to 6.2 percent in the US. Daimler and BMW both sell 14 percent of their cars to the US market, far less than the 26 percent and 24 percent sold respectively to China.
Appease or threaten?
Still, if Trump made good his threat to impose 25 percent tariffs on European cars, it would be a disaster for the German car industry.
Currently, duties of 2.5 percent are levied on European cars entering the US. Conversely, US cars are hit with 10 percent tariffs going the other way. Trump has repeatedly said this is unfair. The situation is different with trucks and pick-ups though: on those, the import duty in the US is 25 percent, compared with 14 percent in the EU.
The Germans may well promise Trump that they will relay his concerns in Berlin and Brussels. They might even tell him they want tariffs gone altogether themselves.
But because they have no actual power over such things, they might be forced to rely on the implicit threats they can make themselves. If punitive tariffs of 25 percent are on the table, then sustained investment in the US is surely off it.
Such words may be left unsaid, and be only present in the room as the daggers in the men’s smiles — probably the kind of communication Trump understands best.
Credit: Source link