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BMW's North American boss has some tough words on tariffs, as automakers await a potentially pivotal decision on tariffs from the Trump administration.
The Commerce Department is expected to deliver a report within days that many industry experts say could deem auto imports into the United States a threat to national security and seek tariffs as high as 25 percent on all vehicles imported into the U.S. The tariffs for most light vehicles is now at 2.5 percent, and there is a long-standing 25 percent tariff on imported pickup trucks.
"If tariffs go up, it's not good for the consumer it's not good for our dealer network it is not good for the economy in total," said Bernhard Kuhnt, CEO of BMW North America told CNBC on Wednesday.
"I'm not at politician, but we'll deal with the consequences," he added.
BMW is a German company that both imports vehicles into the United States and exports them out, many from a factory in Spartanburg, South Carolina — BMW's largest globally. The automaker is expanding production at the plant and expects to hit a near-record level of production this year of more than 400,000 vehicles, most of them premium sport utility vehicles and crossovers which are quickly growing in popularity with buyers both in the United States and around the world. BMW says it is the largest U.S. exporter of vehicles in terms of total sales. It exported $8.8 billion in vehicles in 2017, according to the Commerce Department.
Part of problem for BMW is that it stands to be hit with import tariffs on sedans imported into the United States, and potentially hit with retaliatory tariffs in other countries on U.S.-made vehicles. China, for instance, briefly raised tariffs on any U.S.-made vehicles to 40 percent in 2018 in response to U.S. duties on Chinese products.
U.S. premium SUV sales climbed from roughly 1 million in 2015 to 1.3 million in 2018 and are expected to hit 1.5 million by 2020.
President Donald Trump has repeatedly railed against what he says is a fundamental trade imbalance between the United States and its trading partners, including China and European countries. Tariffs, such as the 25 percent tax on imported pickups, have been successful in keeping American-made trucks popular and U.S. workers employed, he said on Twitter in late November.
"The reason that the small truck business in the U.S. is such a go to favorite is that, for many years, Tariffs of 25% have been put on small trucks coming into our country. It is called the "chicken tax,'" he said. "If we did that with cars coming in, many more cars would be built here....."
Correction: BMW expects to hit a near-record level of production at the Spartanburg, South Carolina, plant this year of more than 400,000 vehicles. An earlier version misstated the number of vehicles.