President Donald Trump’s 25 percent tariff on imported steel takes effect Friday.
German business leaders said they worry it could affect the car industry in the South, which has become a truly global car market.
Mercedes-Benz USA opened its new North American headquarters in metro Atlanta for 1,000 employees last week to the tune of violins.
It’s a fancy corporate building, mostly glass, standing upright with the help of concrete and 1,500 tons of steel. The luxury car manufacturer is owned by Germany-based Daimler, but Mercedes-Benz USA CEO Dietmar Exler used the grand opening to remind the crowd of the brand’s U.S. presence.
“We are now in the midst of construction of our own factory here, which will open doors in the fall in Charleston, S.C., and we’ll make all of the Sprinter vans for North America right here,” Exler said. “Right next to me you have a member of the most successful SUV family, a GLE Coupe. As you know, the GLE and the GLS are produced in Alabama. Last year, 280,000 cars were produced here not just for the U.S. market, but for markets all over the world.”
Southern Car Exports
The German Association of the Automotive Industry said German car factories in the U.S. made more than 800,000 vehicles last year, and about half were sold overseas.
Trump signed a proclamation last week to impose a 25 percent tariff on steel from every country except Canada and Mexico. The hope is to boost steel manufacturing in the U.S.
Tariffs on steel could hurt companies like Mercedes-Benz, Volkswagen and Porsche, said Stefan Mair with the Federation of German Industries in Berlin. Mair was at the grand opening.
“Do you see the cars outside? There’s a lot of steel in there,” Mair said. “We think there will be some additional percentage points on the prices of cars.”
That price increase could be enough to stop people from buying new cars, said Lisa Cook, who teaches economics and international relations at Michigan State University.
“If consumers are price sensitive, and they are for many types of cars, this could cause people to postpone their decision to purchase a car,” Cook said.
The German American Chamber of Commerce for the Southern U.S. said a little more than a quarter of all U.S. steel is used to make cars in this country.
“Approximately 25 percent of all steel is used in automotive manufacturing and 10 percent in machinery and equipment; both industries that German companies have heavily invested in the U.S. over the years,” said Stefanie Ziska, president of GACC South in a statement.
Making cars more expensive to build and export could hurt U.S. jobs, said Jeffrey Rosensweig, who teaches international business at Emory University.
“That would not only cost us jobs, it would hurt the U.S. and could potentially harm the U.S. trade balance,” Rosensweig said. “Just the opposite of what President Trump thinks he’s trying to achieve.”
He said the steel tariffs could trigger a trade war that would go beyond the auto industry.
“These foreign nations that we’re going to put these import taxes on, these tariffs, are not stupid,” Rosensweig said. “They’re going to retaliate against our exports, and they’re going to hit us where it hurts, which is often our farm exports.”
And in trade wars, he said, everyone loses.
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