European car industry raises fears over Trump victory

November 10, 2016

Concerns have emerged following yesterday's victory of Republican leader Donald Trump in the US presidential elections. If his rhetoric matches reality, OEMs fear it could harm the automotive industry worldwide.

In statements made before the election, he promised to revoke trade agreements to bring jobs back to the US, introduce trade tariffs and fight policies to tackle climate change.

It remains to be seen whether he will be as aggressive as he appears when he enters the Oval Office, but industry associations in Europe are already nervous.

Many concerns focus on whether Trump will introduce new trade barriers in the US to try to protect jobs. The impact on international trade could harm European economies, which in turn could lead to a reduction in demand for new and used cars.

Swati Dhingra, a lecturer in economics at the London School of Economics, said: ‘If Trump goes ahead with a very protectionist stance for the US with respect to all its different trading partners, what we are going to see is potentially some reduction in global GDP as trade volumes decline and it becomes harder to do business across borders.’

Germany's auto industry association Verband der Automobilindustrie (VBA) expressed concerns that Trump’s election could have a negative effect on carmakers.

Matthias Wissmann, president of the VDA, said: ‘As the president of the largest economy, he bears great responsibility for his country, as well as for the world economy and international relations. The hope is that many of his statements are because of the election campaign and that his government dealings themselves will be characterised by a more moderate course.

‘Access to international markets and the reduction of trade barriers are central prerequisites for securing our competitiveness and thus for growth and employment.’

The US election is creating the same uncertainty about trade with the rest of the world that Brexit is having on relations between the UK and the European Union.

Car expert Ferdinand Dudenhöffer said non-US companies could find it harder to sell into the US unless they have a local manufacturing base.

He said: ‘Trump could try - or will try - to build up barriers to trade so the carmakers with US factories are on the winning side.’

There are also fears Trump could kill off the Transatlantic Trade and Investment Partnership (TTIP), a proposed agreement to remove trade barriers between the European Union and the US, with the aim of promoting economic growth.

A Trump presidency also threatens to undermine the growing low-emission car sector, as he has publicly stated that global warming is a myth.

Trump said: ‘The concept of global warming was created by and for the Chinese in order to make US manufacturing non-competitive.’

Trump also pledged to ‘cancel the Paris climate agreement’ which has been the driving force behind many environmental changes being introduced in Europe.

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March 31, 2017

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