In the last song Janis Joplin recorded before she died, she asked, “Oh Lord, won't you buy me a Mercedes Benz?” Well, if Donald Trump has his way, no Americans would be allowed to buy a Mercedes or any other German car.
Der Spiegel reported that during Donald Trump’s recent trip abroad he told European Union officials: “The Germans are bad, very bad. Look at the millions of cars they sell in the U.S. Horrible. We're going to stop that.”
There are many things wrong with this statement.
Let’s start with basic notions of right and wrong, and freedom. Trade takes place between individuals and businesses or between businesses and other businesses — not between governments (except on rare occasions). It is morally right to allow two parties to engage in voluntary transactions. If an American wants to buy a car from a German car company because he or she likes the car’s safety features or the way it handles on the highway, then the U.S. government or, in this case, the individual elected president, has no moral right to prevent such a transaction.
Let’s turn to the economics. “Rather than criticize German exports to the United States, Donald Trump should celebrate the economic ties between the U.S. and Germany, our fifth largest trade partner, that intertwine the economic well-being of both countries through international trade,” said Mark Perry, a professor of economics and finance at the University of Michigan's Flint campus and creator and editor of the popular economics blog Carpe Diem. “The ‘horrible’ Germans both sell millions of cars to the U.S. and build millions of cars here, and in the process employ thousands of Americans and invest billions of dollars. So as often is the case when it comes to Trump and trade, he routinely departs from economic reality and only tells half of the story.”
The facts support Perry. Politico reports Germany's Association of the Automotive Industry (VDA) estimates “plants owned by German carmakers and automotive parts manufacturers [have] created 110,000 jobs” in the United States. “For German manufacturers, the U.S. is not just an important market, but more than ever a significant production location," according to the association’s president Matthias Wissmann.
“German carmakers — including BMW and Daimler — made some 854,000 vehicles in the U.S. in 2016, according to VDA figures,” notes Politico. “That marks a four-fold increase on the 214,000 produced in the country in 2009. The VDA said that just 38% of cars produced in the U.S. by German companies are sold in the U.S., with the rest exported to mostly Asian and European markets.”
As Bloomberg’s Leonid Bershidsky points out, “Daimler made a total of 300,000 Mercedes cars in Tuscaloosa, Alabama, in 2016. The plant is the state's biggest exporter. VW's Chattanooga, Tennessee, operation has a 150,000-vehicle production capacity and also is export-oriented.”
Even if German car companies only built cars in Germany and exported them to the United States for sale, then that would be fine, since the companies would be satisfying the desires of American consumers. But it turns out German companies are pleasing U.S. car buyers and creating jobs for American workers.
Bad-mouthing foreign companies selling and investing in the United States is unwise. And so, too, is preventing Janis Joplin or any other American from buying a Mercedes Benz.
