The Car Tariff Discussion

If you follow German news over the past month, there is a lot of chatter/hype over this US talk of trade tariffs going up over imported cars into the US (Trump suggesting a 25-percent tariff).

So, it's a fascinating thing to watch German Minister of Economics, Pete Altmaier (CDU).....now heavily in the middle of this, and commenting almost nightly.

Let me lay out the beginning of this episode, so it makes more sense.  At the very beginning of the Trump administration....there was a meeting around three weeks into the 'new' era, and Trump wanted to sit and chat on trade with Chancellor Merkel.  What she did in a brilliant moment of Merkel-wisdom....was to say that she had no control over German trade, and that the EU was the one to discuss trade negotiations.  Over and over.....same explanation.

It took maybe a month for Trump to finally size this up and say 'fine'.....it's just between me and the EU. 

Well...a year into this, it's obvious at that point that the EU is doing their typical 'slow-ball' strategy.  Trump said 'fine' again, and then went to the 25-percent car tariff idea.

Now, this gets interesting because of the 28 members of the EU....roughly 27 members of the EU are unaffected, and have little to no car imports into the US.  The one country with car imports going on?  Wanna guess?  Yes, Germany.

So this blunt message was supposed to get EU attention.  Well, no.....the EU kinda fell into a second message strategy....screw Germany. 

At this point, the Merkel-crew (Altmaier included) begins to realize that Trump, with the aid of marginal EU talks....were going to have a disastrous impact on German industry.  The Merkel effort to push everything toward the EU and suggest that Germany has no control over trade?  Well.....Trump basically outplayed her strategy, and made German participation now a big deal.

What Trump is likely playing for?  Zero tariffs in the EU (particularly in Germany) for vehicles, and you get the same deal in the US. 

What the loss is for the Germans if they screw up this trade talk deal?  Some folks suggest that the Germans will lose around 5-billion Euro (it's not a factual number, but more of an estimate of the cost upon German industry).  The fact that this occurring in a BREXIT year?  Yeah, it's a bigger deal because no one is sure about the UK market after BREXIT.  Would Trump's team be there quickly after BREXIT and get a prime trade deal with the UK?  Yeah, that's more than likely.

The curious thing, when this falls apart (if it does) is that Merkel can clearly blame Trump, but to be honest.....it's a Trump-EU-Merkel blame game, and the real losers are the German worker, and the German consumer.  All that Merkel had to do back early on in 2017....was just go and discuss a zero-tariff situation between Germany and the US for car imports, and she just couldn't do it.

Sit back....enjoy the chatter, and be entertained.