After Trump Dumps on Euro, Germany Inc. Touts Benefits of Trade

Germany’s business leaders say there’s a problem with the new president’s “America First” policy with Donald Trump stepping up criticism of the country’s colossal trade surplus. U.S. consumers and workers are the likely losers from many of his proposed restrictions, they say.

After a top Trump administration official criticized German trade policies, the perils of protectionism in comments Wednesday were emphasized by al the chief executive officers from BMW AG, Deutsche Lufthansa AG, and Siemens AG. Peter Navarro, the head of the White House National Trade Council, called Germany’s surplus a sign of a “grossly undervalued” currency in an interview with the Financial Times.

The German government has long upheld the ECB’s independence and the European Central Bank is responsible for the euro, noted the Chancellor Angela Merkel as the comments drew immediate censure from her. Highlighting the benefits of free trade, corporate leaders quickly jumped in.

The importance of the U.S. to his company in terms of both sales and production was stressed by BMW chief Harald Krueger at an auto-industry conference on Wednesday. To achieve an annual capacity of about 450,000 sport utility vehicles, the company is expanding its factory in Spartanburg, South Carolina, its largest anywhere. The company exports 70 percent of its American production — vehicles valued at some $10 billion last year and BMW and its suppliers employ 70,000 people in the U.S., Krueger said.

“Free trade has made this U.S. success story possible,” Krueger said at the CAR-Symposium in Bochum, Germany. BMW seeks to locate its factories “in a balanced way internationally. This safeguards continuity in volatile times.”

According to estimates by the Center for Economic Studies, a research group in Munich, a current account surplus — the balance of goods, services, and capital transfers, was in favor of Germany to the tune of about $310 billion last year against the U.S. Buying some $125 billion worth in 2015, the U.S. is the biggest importer of German goods. And Germany in 2015 imported $50 billion in products from the U.S. and it is the No. 4 foreign market for U.S. companies.

Calling the airline industry “the good guys of globalization”, Lufthansa CEO Carsten Spohr said his company remained committed to free trade. The executive said this while speaking in Abu Dhabi where he announced a series of projects with Gulf carrier Etihad Airways.

“The more protectionist elements around the world come up, the more aviation has to play its role to open up the world,” Spohr said.

Saying his company is a net exporter from the U.S., with more than 60 factories employing about 50,000 people, Joe Kaeser, CEO of industrial giant Siemens, cautioned against the rising tide of populism worldwide.

“It worries me that we’re hearing sentiment that doesn’t fit the U.S.,” Kaeser said at the company’s annual shareholder meeting in Munich. “You ask yourself does that fit a country that stands for freedom and openness? America became great through immigrants.”

BMW was singled out by Trump last month in an interview with a German tabloid as the company is building a $1 billion factory in Mexico to produce as many as 150,000 of its 3-Series sedans annually. The automaker could face stiff tariffs on vehicles produced there, Trump told Bild Zeitung.

“I would tell BMW, if they want to build a factory in Mexico and sell the cars in the U.S. without paying a 35 percent tax,” Trump told Bild, “then they can forget about it.”

(Adapted from Bloomberg)

 

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