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Originally Posted by tturedraider
Let’s be accurate. If Trump has his way Germany will open their market to U.S. manufacturers in the same way our market is open to their manufacturers.
That does raise a kind of interesting question. I wonder if Germany imposes tariffs on vehicles imported from the United States that were manufactured by BMW and other German manufacturers.
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If the current Administration puts tariffs on EU-manufactured goods imported to the USA, then the EU will put equivalent tariffs on US-manufactured goods imported into the EU. It’s how tariff conflicts escalate. And BMWs manufactured in Spartanburg will be more expensive back in the EU. And likely fewer will be bought, which will likely reduce their export.
Tariffs work both ways, and generally they increase inflation in the country imposing them. But the net effect is very uncertain even if in the short term, they protect local manufacturing.
Personally, I doubt that BMW will shift production of all its other models to the USA simply to avoid tariffs. One possible scenario is that Spartanburg exports to the EU dry up, while the price of imported models goes up. So you get a loss of export revenues plus inflation. There are other scenarios, but this is the risk.
In a simplistic world view, tariffs encourage foreign manufacturers to set up factories inside a country. But we’ve spent the last 30 years setting up a globalised free trade market, often with supply chains, sourcing and assembly spread across many countries. That complex fabric can’t always be re-woven quickly or easily, if at all.