After GM, Ford, Toyota, Donald Trump Goes After BMW, Threatens To Slap 35 Per Cent Border Tax

Swarajya Staff

Jan 16, 2017, 02:15 PM | Updated 02:15 PM IST

Donald Trump
Donald Trump

Donald Trump seems in no mood to relent on his war on manufacturers who make their products outside and sell in America. During the campaign, he had threatened to impose tariffs on companies that want to move their manufacturing plants outside of America. Many didn’t take this seriously brushing aside these calls for protectionism as mere campaign rhetoric. Well, since he was elected President on 8 November, Trump has threatened to slap border tax on General Motors, Ford Motors, Toyota. Now he has warned the German maker BMW of the same consequence.

In an interview with German newspaper Bild, Trump said his administration will impose a border tax of 35 per cent if BMW goes through its plans to build a new plant in Mexico which will also export to the US. He suggested that the company should build its plant in America. In a ludicrous logic defying common sense of free market economics, Trump said that while German company made BMW cars are a frequent sight in New York, one doesn’t see the reciprocity given to US car maker Chevrolet in Germany.

Well, the fact that maybe Americans like BMW more than the Germans prefer Chevrolets doesn’t seem to cross his mind.

Earlier this month, he threatened Toyota with a border tax which is building a $1 billion Corolla factory in Guanajuato state in Mexico. And Toyota is not even a US company. Trump tweeted: (He got the plant location wrong, though)

Trump cannot impose “big border tax” as what Toyota is doing isn’t illegal under the North Atlantic Free Trade Agreement (NAFTA). Trump will have to renegotiate the trade deal if he wants his threat to be taken seriously.

On General Motors, he tweeted:

While GM defended itself against this attack from Trump, Ford announced that it will not be going ahead with its $1.6 billion Mexico plant but rather invest in Michigan state, which Trump won with a thin margin. The company’s CEO told the media that this will add 700 new jobs.

Last month, Air conditioning company Carrier had announced that it reached a deal with Donald Trump and would be keeping nearly 1,000 jobs in Indiana. So, Trump’s bullying tactics are already working when he hasn’t even taken the oath of the office.

It is not certain if Trump will be able to achieve his aim of reviving manufacturing jobs in the country but his threats which may soon have legal backing are going to make life difficult for manufacturers looking to shift their plants outside the US in lure of cheap labour. The companies forced to stay in the US may opt for more automation as labour costs in the US are much higher compared to third world countries like Mexico. So, manufacturing jobs revival is very much uncertain. For now, all remains in the womb of time.

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