Donald Trump threatens BMW of a 35 percent border tax

Automotive - Himanshu Gill - Jan 16,2017

Rating -

stars - based on 21 reviews

donald trump threatens bmw of a 35 percent border tax

US President-elect Donald Trump has warned that he will impose a border tax of 35 percent on the cars that BMW will manufacture in its new plant in Mexico.

Earlier, BMW had confirmed that a plant will be built in San Luis Potosi in Mexico that will manufacture the BMW 3 Series, starting from 2019 and will export cars to the world market. The plant in Mexico is supposed be an addition to the existing 3 Series production sites in Germany and China.

Trump has already threatened manufacturers like General Motors, Ford Motors and Toyota of slapping heavy border taxes. This time, he has warned the German car-maker of the same consequence.

Last week, BMW had reaffirmed its plans of making a plant in Mexico when people feared that BMW may back-out from its original decision following Trump’s continuous threats to automobile industries.

Donald Trump in an interview said that it would be “much better” for the company to build its plant in the United States. He went on to say that if any car from this plant would enter the US, the company will have to pay 35 percent tax.

Shortly after Trump’s remarks, BMW shares went down by 0.85 percent. BMW has committed to invest a whopping $2.2 billion in this facility for an annual production of 15,000 cars. Notably, Mercedes-Benz and BMW already have sizeable factories in the US where they manufacture higher-margin sports utility vehicles (SUVs).

Shares of Daimler and Volkswagen also fell post the announcement. Daimler said it is planning to begin assembling its Mercedes vehicles in 2018 in a $1 billion plant that it shares with Renault-Nissan in Aguascalientes in Mexico.

Volkswagen Group’s Audi division also inaugurated a $1.3 billion factory for production of 150,000 vehicles in Puebla, Mexico. Audi has also committed on manufacturing its electric and petrol Q5 SUVs in Mexico.