German Car Makers Fear US Trade Sanctions

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German Car Makers Fear US Trade Sanctions



The German automobile industry is recovering rapidly from the economic downturn. But new challenges may await. Politicians in Washington may be considering a levy on cars imported from Germany.

The news in June was heartening. The German automobile industry, hit hard by the global economic downturn, was experiencing a rapid comeback, according to a report three weeks ago. Sales in the US were particularly strong.

Now, though, some are concerned that US trade sanctions might bring the party to a premature end. Sources within the German government and in the automobile industry have told SPIEGEL that Washington may be considering raising tariffs on German cars imported into the US.
The alleged plan is apparently born out of frustration in the US that Berlin ultimately declined to provide support to General Motors subsidiary Opel despite requests to do so from Washington. Furthermore, while German car makers have been able to increase sales in the US, GM and Ford have not found much recent success in Europe.

Feeling the Pain

Many might argue that such a discrepancy may have more to do with European tastes in cars, but US politicians are concerned it has more to do with EU trade policy. In conversation with German auto industry leaders, political leaders from Washington pointed to the fact that Europe charges a 10 percent tariff on cars imported from the US. Automobiles heading into the US from Europe, however, are only taxed with a 2.5 percent levy.

Reading between the lines, German auto industry leaders are now concerned that Washington intends to increase that levy in the near future.
Any such tax would not prove particularly harmful to Mercedes or BMW, as both companies produce most cars meant for the US market in the US. Volkswagen, however, which is only now building its first factory in the US, could feel the pain.

German Economics Minister Rainer Brüderle recently ruled out German government aid for Opel, leading to GM withdrawing all requests for aid from European public finances in its attempt to restructure the Germany-based carmaker. Germany had originally sought to midwife a sale of Opel to a Canadian auto-parts manufacturer, but GM changed its mind about going through with the sale at the last minute. Many in Berlin were less than impressed by the GM about face.

cgh/SPIEGEL

http://www.spiegel.de/international/...706043,00.html