A MARTÍNEZ, HOST:
The Trump administration's 25% tariffs on foreign cars and parts go into effect this week. Germany is the biggest car manufacturer country in Europe. In 2023, it produced more than four million vehicles. Here to discuss how Germany and German companies are preparing, we called German Finance Minister Jorg Kukies.
So, Minister, President Trump says these tariffs are meant to boost American manufacturing. Do you expect German carmakers maybe to open up more factories here or increase productions at the ones that are already here?
JORG KUKIES: Yeah, first of all, the German manufacturers have a lot of factories in the United States already - BMW in Spartanburg, Mercedes, VW are some of the biggest car producers in the United States and actually are among the leading exporters of cars of the U.S. And, of course, they're constantly adjusting the global supply chains. But at the end, it's, of course, their business decision to decide on capacities in the United States.
MARTÍNEZ: So it's not something that Germany would maybe try encourage these car companies to try and do more in the United States? I know there are five total assembly plants for German cars in the U.S.
KUKIES: Well, we always encourage trade and investments between the United States and the U.S. in general. But, of course, individual business decisions by companies is not something where we would get involved in as a government.
MARTÍNEZ: I know the European Union has a 10% tariff on imported American cars. Would Germany be able to ask the EU to lower that somehow?
KUKIES: Well, in the document that drives the coalition discussions between the two parties that are forming a government at the moment, there is a sentence in there that says, we would like a free trade agreement between the United States and the European Union. So we could even envisage going down all the way to zero tariffs, where both sides would levy no tariffs. So that's imaginable but, of course, needs to be negotiated.
MARTÍNEZ: How - wow. How likely do you think that is? 'Cause it sounds like it would be a difficult scenario, based on the current circumstances - the way it is right now between the United States and everyone else.
KUKIES: Yeah. We're not naive. Congress would have to approve any reduction in tariffs from the U.S. side. But that is completely up to negotiations, and maybe a symmetric reduction would also be possible. Then, of course, tariffs isn't the only thing that would be discussed and negotiated - also the nontariff issues around trade. So at the end, if there is a negotiation, there would, of course, have to be a comprehensive package that includes tariffs, that includes nontrade and that could potentially also include investment commitments.
MARTÍNEZ: So I read a German spokesman on Friday say that, quote, "nothing is off the table" in terms of retaliating against the U.S. What is being considered?
KUKIES: Well, first of all, the clear position of the German government is that, first of all, we should negotiate before talking about retaliation. But, of course, everyone knows that if a negotiation doesn't work, then retaliation is, of course, always a possibility. And that's something, during my visit to Washington, that many of the companies that I talked to are also keenly aware of because, of course, also the European market is very attractive to U.S. companies.
MARTÍNEZ: How do you think all of this will affect the German economy?
KUKIES: Well, we are very externally oriented. The United States, since last year, is again our biggest global trading partner. So so far, before that, it was China - now the U.S. Due to our de-risking strategy from China, now the United States is our biggest trading partner, so of course, it would have a very substantial impact. But at the moment, of course, given that there is still openness to negotiations, we can only speculate because, of course, it depends on exactly what the type and structure of tariffs is that end up being levied.
MARTÍNEZ: Well, what - yeah. Well, what's the worst way you think Germany would suffer from this?
KUKIES: Well, it's hard to speculate about numbers because the 2 of April is still yet to come. And there's been announcements. And before we don't know what will be on the table, it's impossible to give you a number of how that would affect GDP, employment, wages, etc. I mean, that would be pure speculation.
MARTÍNEZ: Do you expect German carmakers maybe to sell less to America and more to other parts of the world where tariffs aren't as high?
KUKIES: Well, I mean, one of the key responses that Germany encourages the European Union to do, as the largest member state, is, of course, to accelerate the agreement on free trade agreements with the rest of the world, right? I mean, Mercosur, the Latin American free trade area, is a partner of the EU. And, of course, one of the attractions of the agreement between the EU and Mercosur, which Germany strongly supports, is that then tariffs would be reduced between the EU and Latin America. There's negotiations ongoing with India, Indonesia, many other parts of the world, and we can only encourage and keep encouraging the EU to sign deals with those parts of the world.
MARTÍNEZ: That's German Finance Minister Jorg Kukies. Thank you very much.
KUKIES: Thank you. Transcript provided by NPR, Copyright NPR.
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