Donald Trump Threatens German Carmakers With 35 Per Cent Import Tariff

He is quoted as saying, "If you want to build cars in the world, then I wish you all the best. You can build cars for the United States, but for every car that comes to the USA, you will pay 35 percent tax. I would tell BMW that if you are building a factory in Mexico and plan to sell cars to the USA, without a 35 percent tax, then you can forget that."

Mercedes-Benz and BMW manufacture higher-margin SUVs for export to Asia and Europe in their respective factories in the States. Volkswagen makes the US-spec Passat at its plant in Chattanooga, Tennessee and is also expected to add the Atlas SUV to the production line there.

As far as their facilities in Mexico are concerned, BMW executive Peter Schwarzenbauer told reporters that the company will stick to its plan to invest nearly $1 billion in a new plant in Mexico. Come 2018 and Daimler will start the assembly of Mercedes-Benz vehicles at a facility shared with Renault-Nissan in Aguascalientes in Mexico. Last year, Audi inaugurated a $1.3 billion facility near Puebla, Mexico where it will build electric and petrol Q5 SUVs.

Responding to Trump's remarks, German Economy Minister Sigmar Gabriel told Bild that instead of trying to penalize German carmakers, the United States should rather respond by building better and more desirable cars.