As U.S. Targets Berlin on Trade, German Manufacturers Lobby Trump

As U.S. Targets Berlin on Trade, German Manufacturers Lobby Trump

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The anger from the Trump administration has been a rude shock, threatening the bedrock of Germany’s economy and leaving executives perplexed. Their quandary is one faced by business across Europe: Mr. Trump has questioned the assumptions that have underpinned trans-Atlantic commerce since the end of World War II, without making clear what could come instead.

“I think there is a little bit lack of understanding,” Harald Krüger, the chief executive of BMW, said in an interview at the Geneva International Motor Show in March, not long after Mr. 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 Mr. Trump — has proved exceptionally difficult. Mr. Trump’s election disrupted old lines of communication and left BMW and other companies with no idea whom to talk to in Washington.

For now, businesses hope that Mr. Trump is not really serious about erecting trade barriers with Europe, which would arguably damage the United States economy as well. They hope that, over time, they can find ways to sway him.

President Trump met with Angela Merkel, the German chancellor, and the leaders of three German companies last month in Washington. Among them were, in front row seated, Joe Kaeser, chief of Siemens, left; and Harald Krüger, chief of BMW.

Credit
Clemens Bilan/European Pressphoto Agency

If the Trump administration does follow through, however, the consequences will be particularly ominous for Germany.

The United States is Germany’s biggest customer. American consumers and businesses bought machine tools, construction equipment and other goods from Germany worth 107 billion euros, 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, an imbalance that members of the Trump administration have vowed to correct.

The March 17 visit to Washington, led by Ms. Merkel, provided a measure of how seriously Berlin views the threat.

“It was a good discussion,” Mr. Krüger said a few days later 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 session with the president included a round-table meeting where Mr. Krüger and the other business leaders, Joe Kaeser of Siemens and Klaus Rosenfeld of Schaeffler, gave a presentation on the country’s vocational education system for young people.

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.

Germany and the United States, traditionally close allies, are still groping to find common ground following President Trump’s election. Those differences were on display at a meeting of finance ministers and central bank presidents from the Group of 20 in Baden-Baden, Germany, that began on the same day that Ms. Merkel visited Mr. Trump.

The American delegation, led by Steven Mnuchin, the Treasury secretary, refused to endorse language from a joint statement last year that condemned protectionism and endorsed free trade. The stance taken by the United States, the linchpin of global commerce, upset a longstanding consensus and sent shudders through the rest of the world.

The production line at BMW’s South Carolina plant. Besides BMW, Mercedes has a plant in Tuscaloosa, Ala., and Volkswagen one in Chattanooga, Tenn.

Credit
Travis Dove for The New York Times

But even before Mr. Trump’s election, it was a gloomy period for advocates of trans-Atlantic trade. After more than three years of painstaking negotiations, an ambitious effort to dismantle trade barriers between the European Union and United States stalled amid opposition from, of all places, Germany.

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 Mr. Trump and populist leaders in Europe make it out to be.

The question European business is still wrestling with is how to do so.

BMW has long been one of the most sophisticated political operators in the United States. The company, based in Munich, has government relations offices in South Carolina, site of its largest factory in the world; Washington; and Sacramento. California is important to the car company because the state sets emissions standards that are emulated by numerous other states.

And BMW is not without political clout. It employs 9,000 people in Spartanburg, S.C., in a county that voted for Mr. Trump by a large margin. At least four times that many work for suppliers. Senator Lindsey Graham of South Carolina is a fierce defender of the company’s interests, and one of Mr. Trump’s most vocal Republican critics.

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 of those BMWs went to China. The company has in fact created the kind of manufacturing jobs that Mr. Trump says he wants.

It is not alone. Many German companies have large factories in the United States, including Mercedes in Tuscaloosa, Ala., and Volkswagen in Chattanooga, Tenn., where the company recently began making a new S.U.V., 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.

And while the rhetoric in the United States has turned distinctively against foreign trade, American politicians have not shown any aversion to it when it brings jobs to their districts.

That includes some people close to the president. For example, as governor of South Carolina, Nikki R. Haley was known as a friend to BMW and lobbied heavily for Volvo Cars to choose the state as a site for a new factory that will have an annual capacity of 100,000 cars. That was despite Volvo’s being owned by Geely Automobile Holdings, which is based in China, a prime target of Mr. Trump’s rhetoric.

Volvo broke ground for the factory in Berkeley County, S.C., in September 2015. Ms. Haley now has a new job. She is Mr. Trump’s ambassador to the United Nations.

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