By Jack Ewing
When Angela Merkel, Germany’s chancellor, met with President Donald Trump in Washington, she brought three executives with her, all heads of German manufacturing or engineering giants. Their message? Germany is not a threat to the United States.
For decades, the United States has been a kind of second home to German carmakers, a place not only to sell vehicles but also to build them. German manufacturers employ thousands at plants across the United States, and produce finished products like cars, as well as parts and machinery, within the country for sale domestically or export abroad.
But that the point—made during a session that included the chief executives of BMW, the carmaker; Siemens, the electronics and engineering company; and Schaeffler, a major supplier of parts for automotive engines, transmissions and chassis—needed to be made at all underlines growing concern in Berlin over hostility directed at German industry by the Trump administration.
Peter Navarro, an economic adviser to Trump, has accused Germany of being a currency manipulator, even though German politicians and economists are among the staunchest critics of European Central Bank policies that have encouraged a weak euro. And the US president himself wondered aloud to a German newspaper in January why Americans buy lots of Mercedes cars while Germans hardly buy any Chevrolets.
“I think there is a little bit lack of understanding,” Harald Krueger, the chief executive of BMW, said in an interview at the Geneva International Motor Show in March, not long after Trump had attacked the company for building a plant in Mexico. “Maybe there hasn’t been enough data supplied before.”
But delivering a counterargument to the administration’s protectionist rhetoric—pointing out, for example, that BMW’s largest factory in the world is in a South Carolina county that voted heavily for Trump—has proved exceptionally difficult. Trump’s election disrupted old lines of communication and left BMW and other companies with no idea whom to talk to in Washington.
If the Trump administration does follow through, however, the consequences will be particularly ominous for Germany.
The United States is Germany’s biggest customer. US consumers and businesses bought machine tools, construction equipment and other goods from Germany worth €107 billion, or $115.5 billion, last year, according to Germany’s Federal Statistical Office. By comparison, Germany bought only €58 billion in goods from the United States.
“It was a good discussion,” Krueger said a few days after his visit to the White House, at a news conference in Munich. “We were able to talk about how much German carmakers have invested and how many jobs we have created.”
The issue of free trade came up, the BMW chief said, but he did not elaborate except to say that it was essential that the carmaker be able to export products from the United States. German companies fear that Trump policies could ignite a trade war and interfere with exports.
The subtle message of the presentation was that Germany’s export success was not just the result of a cheap euro. Whether that message got through, however, is unclear.
Surprisingly, strong majorities in the United States and Germany support trade between the two countries in principle, according to a survey by YouGov for the Bertelsmann Foundation, a German research group. That suggests that there is space for businesses to promote their view that free trade is not the job killer that Trump and populist leaders in Europe make it out to be.
The question European business is still wrestling with is how to do so.
While it’s true that BMW is building a factory in Mexico, it will be only a third the size of the Spartanburg plant, which exported vehicles worth $10 billion from the United States last year, more than any other carmaker. Many German companies have large factories in the United States, including Mercedes in Tuscaloosa, Alabama, and Volkswagen in Chattanooga, Tennessee, where the company recently began making a new SUV, the Atlas, which will go on sale in May. Siemens says it has about 60 plants in the United States turning out products like wind turbines and light rail vehicles. It employs 50,000 people in the country.
© 2017 New York Times News Service
Image credits: Stephen Crowley/The New York Times