German Carmakers Catch In Crossfire of U.S.- China Trade Row

German carmakers BMW and Daimler are under increasing pressure to diversify production of their sports utility vehicles SUV outside of the United States as a result of Washington’s growing trade tensions with China. BMW, the largest vehicle exporter from the United States in terms of value, has its largest factory in Spartanburg, North Carolina and faces a $965 million impact from tariffs, with Daimler exposed to a $765 million hit. "But any switch from one factory to another costs millions of euros, takes months to implement, and is taken with a long-term view. We have to make decisions, like about factories in Spartanburg or factories in Mexico, which are based on a horizon of 20 to 30 years. If we were to change our strategy whenever a tweet comes out, we would get crazy" - BMW board member Peter Schwarzenbauer said.

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China is the No 1 purchaser of automobiles in the world. Would you want to be shut out of selling your cars because of a trade war ? And, who is going to suffer most in the end? Chinese will not.

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Not just BMW. Also, Mercedes-Benz and Tesla are the biggest potential losers from higher Chinese tariffs on U.S. auto imports.

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Many things are related to this. It's easy enough to say that if someone can afford a BMW or a Mercedes, they can afford to pay an extra couple thousand. The part we all are forgetting is that extra charge is going to affect how many features consumers can afford. That means potential cuts in jobs, benefits, etc.Vicious circle.

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It will affect anyone who works there or any supplier. In that case many will be left out of business...

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Of course, they are afraid. Volkswagen sold 4.2 million cars in China in 2017. German car makers' sales increased by 230% between 2009 and 2017. 

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