When the New York International Auto Show opens on Friday, Audi will be featuring vehicles like the SQ5, one of the German automaker’s latest entries in the highly competitive S.U.V. market. Well appointed and high powered, the SQ5, which ranges in price from $54,300 to nearly $70,000 with options, competes with the likes of BMW, Lexus, Lincoln and Land Rover. It’s a German import, the kind President Trump has threatened with tariffs. The president is miffed at Germany’s “already massive tariffs and barriers” and says he’s going to tilt the track back in our favor. (Technically, Germany doesn’t impose tariffs; the European Union does.) Last year, the United States imported $20.1 billion worth of German cars while its exports of cars to Germany reached $5.7 billion, according to the Commerce Department.
Except the SQ5 isn’t quite a German import. It isn’t even quite German, for that matter. The transmission is German, sure enough, but the engine is made in Hungary, and 63 percent of the other parts are made in Mexico. Those components are actually assembled in San José Chiapa, Mexico — the dreaded Nafta-European Union combo — and the SQ5s are shipped across the border to be sold in the United States. They are also available for export.
Looking from behind the wheel of the SQ5, the road has far more twists than the administration may anticipate. The president seems to think that tariffs will strong-arm manufacturers and suppliers into basing more production in America, or somehow get Europeans to buy Chevys. But supply chains have become so sophisticated as to be borderless, and Audi and other foreign companies have already invested billions of dollars in the United States.
You agree to receive occasional updates and special offers for The New York Times's products and services.
Foreign-badged cars aren’t the only ones that have foreign parts. The Chevrolet Bolt EV — an important vehicle for General Motors — is composed of 26 percent American/Canadian parts. The sales sheet isn’t more specific because the parts don’t care whether they’re made in Ontario or Michigan. The motor and transmission — more than half the total parts — are from South Korea, which has already been frosted by President Trump’s refrigerator tariff. The Bolt is then bolted together at G.M.’s Lake Orion, Mich., plant. In terms of origin, the Chevy Bolt is as American as a karaoke bar — a venue that has become increasingly popular in the United States. Maybe Mr. Trump should slap a tariff on bad singing.
Unlike the president, automakers have realized that free trade isn’t a policy; it’s essential to manufacturing efficiency. They source globally and manufacture locally when it makes economic sense — one reason Audi’s owner, Volkswagen, is investing in more production capacity in Tennessee. American automakers haven’t been able to make small cars very profitably in the United States, so some of that production, such as that for Ford’s Focus, goes to Mexico. Or China. President Trump is now revving up duties on up to $60 billion in unspecified Chinese imports to punish that country for stealing American technology. He might want to avoid autos. Buick’s Envision crossover S.U.V., a potential Audi competitor, is manufactured in Yantai, China, from 88 percent Chinese-made parts. Buick is a best-seller in China; indeed, G.M. sells more Buicks there than here. Cadillac sales increased 50 percent in China last year.Continue reading the main story
One company that is helping the administration close the automotive trade gap with Germany is Mercedes-Benz. It builds and exports S.U.V.s in Tuscaloosa County, Ala. Mercedes says there are about 200 suppliers tied to the plant, the majority of them international firms that have followed the Germans to the United States and built plants here. They’ve added thousands of jobs and pay millions in taxes. Many of these suppliers also export components to other Mercedes-Benz plants worldwide, the company says.
This is how trade works in a rational world — a world the president apparently doesn’t visit. Ford uses fewer than a dozen global platforms, meaning that any car built here can be built the same way (with some local modifications) in China or Brazil. Fiat Chrysler’s all-American Jeep Renegade is assembled in Melfi, Italy. You can order a Renegade with a Tigershark engine built in Dundee, Mich., or with Fiat’s highly efficient 1.4 liter MultiAir version. Both power plants combine expertise and technology from Chrysler and Fiat. Small world. That’s how Jeep can compete with Range Rover and Toyota outside the United States.
Before he became president and had to give up the wheel, Mr. Trump had a taste for foreign models like Lamborghini and Ferrari. (And for foreign models in general.) Mr. Trump liked bespoke Rolls-Royce motorcars as well. For rich boys and their auto toys, a 10 percent or 20 percent tariff added to the price of exotic metal is meaningless. For the people who make or buy automobiles, a tariff is a road tax, one that won’t help the economy, or the auto industry.
Follow The New York Times Opinion section on Facebook and Twitter (@NYTOpinion), and sign up for the Opinion Today newsletter.
No comments:
Post a Comment