Yiannis Damellos
Members of Donald Trump’s cabinet recently argued his tariff plans are already working and will help reduce taxes in the long term. However, this rhetoric is misleading and serves as a propaganda tool to support a coercive plan against traditional trading allies as evidenced by the auto industry example.
Commerce Secretary Howard Lutnick recently stated in a CBS News interview that reciprocal tariffs are the baseline starting point for fair trade policies. He mentioned that European countries have a 20% value-added tax (VAT), which is why American cars aren’t sold there. "Try buying a Chevrolet in Germany," he said, noting that Americans can buy Mercedes, BMW, and Volkswagen cars in the U. American cars’t be purchased in Europe because are blocked through non-tariff trade barriers. Under Trump’s policy, companies that don’t want to pay American tariffs will have to manufacture their products in the U.S. to be sold here.
But they already do, Mr. Lutnick and they employ thousands of American workers.
Several European automotive manufacturers have established factories in the United States. Here’s a list of some of the major European auto companies with manufacturing plants in the U.S.:
BMW: BMW operates a large manufacturing plant (above) in Spartanburg, South Carolina, which is one of its largest facilities globally. It produces models such as the X3, X4, X5, X6, and X7. The Spartanburg, South Carolina factory is one of BMW's largest production facilities in the world and employs approximately 11,000 people directly. The facility's operations also create thousands of indirect jobs in the local economy.
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Mercedes-Benz: Mercedes-Benz has a factory in Tuscaloosa, Alabama (above), where it manufactures SUVs like the GLE and GLS and is also involved in electric vehicle production. The Tuscaloosa, Alabama plant has created around 4,000 direct jobs, with many additional jobs in the supply chain and communities surrounding the facility.
Porsche: Porsche has a facility in Atlanta, Georgia, focused primarily on vehicle assembly, customs, and distribution, although much of the manufacturing occurs overseas. The Atlanta facility primarily handles logistics and distribution but also supports around 400 jobs directly. The presence of Porsche in the area may foster indirect job growth through associated businesses.
Volvo: Based in Sweden, Volvo operates a plant in Charleston, South Carolina, where it manufactures the S60 and plans to produce electric vehicles. The Charleston, South Carolina plant employs around 2,000 people directly, contributing to local employment in various sectors related to automotive manufacturing.
Audi: While Audi does not have a manufacturing plant in the U.S., it is part of Volkswagen Group, which oversees production at the Chattanooga plant.
Renault-Nissan-Mitsubishi Alliance: Although mostly focused on Nissan, the alliance operates manufacturing plants in the U.S. that produce vehicles for multiple brands, including some Renault models in the past.
Jaguar Land Rover: Jaguar Land Rover has a factory in Spartanburg, South Carolina, producing vehicles for the North American market. The plant in Spartanburg, South Carolina, creates several hundred jobs directly, with further job creation in the supply chain.
In total, several major European car manufacturers have factories in the United States, contributing significantly to local economies and the automotive landscape. The exact number can vary slightly depending on recent industry developments, expansions, or closures, but these are some of the prominent European brands with a presence in the U.S. automotive manufacturing sector.
These European auto manufacturers collectively create tens of thousands of direct jobs, with estimates ranging from approximately 20,000 to 30,000 jobs directly employed by these facilities. When considering the indirect jobs created through related industries—such as suppliers, logistics, and services—the total economic impact may reach well beyond 100,000 jobs.
Trump and Lutnick are both being dishonest. European automotive factories based in the United States generate a substantial number of jobs, contributing to both direct employment at manufacturing facilities and indirect employment in related sectors. A new set of "retaliatory tariffs under such a blackmailing scheme could result in the closure of these existing factories and their return to Germany, Sweden, or other countries. Trump is straining traditional alliances with his bullying and continued distortion of reality.
VAT lies
Now regarding what Lutnick implied about Value Added Tax in Europe being the reason that American cars have an impediment there compared to the European ones, the truth is that Value Added Tax (VAT) applies to all cars sold within European countries, regardless of whether they are American, European, or from any other region.
And although in the United States, there is no nationwide Value Added Tax (VAT) similar to the systems used in many other countries, the U.S. has a sales tax system that serves a similar purpose in generating revenue for state and local governments.
More lies from Lutnick
"Under Trump’s policy, companies that don’t want to pay American tariffs will have to manufacture their products in the U.S. to be sold here. The policy is already working", Lutnick said. TSMC is investing $100 billion in the U.S., Apple $500 billion, SoftBank $200 billion, Open AI, $500 billion.
“These companies are going to build in America … we are going to create trade craft,” he said, adding that the plan is to create five million jobs.
Four companies. This is the measure of success according to Lutnick. Four companies, that have already benefited from U.S. government policies under both Trump and Biden, like TSMC; or Apple, which reportedly donated $1 million to Trump’s inaugural fund, likely as a strategic move to navigate potential tariffs and regulations; or OpenAI, whose involvement in Trump’s AI initiatives suggests alignment with his administration’s policies; or SoftBank whose CEO, Masayoshi Son has publicly supported Trump’s economic initiatives.
And now lets talk about Canada
Lutnick also said critics of Trump's tariff plans are asking the wrong questions focusing on Canada when they should instead be asking, “Why are American cars being made in Canada instead of Detroit and Ohio?” The answer was bad policies implemented through the North American Free Trade Agreement, he said, which transferred American jobs out of the U.S. Trump is reversing this, he said. “Once upon a time in America, … Americans made American cars in America,” Lutnick said. NAFTA enabled companies to “screw all the American workers to move [operations] to Mexico where there's cheap labor and … to Canada and [to] get out of our unions.” Under Trump, union labor will double because factories will come back and workers will have great jobs, he said. “We are going to have a different America, one that produces and manufactures.”
There is nothing more misleading than that. Truth is that there are several reasons why American car manufacturers choose to establish production facilities in Canada rather than sticking exclusively to traditional automotive hubs like Detroit and Ohio. Here are some key factors influencing this decision:
1. Cost Structure
Labor Costs: In some cases, labor costs in Canada may be lower than in certain parts of the U.S., making it economically advantageous for manufacturers to set up or expand operations in Canada.
Tax Incentives: Canadian provinces may offer tax breaks, incentives, or subsidies to attract automotive manufacturers, which can be financially appealing.
2. Access to Trade Agreements
USMCA: Canada is part of the United States-Mexico-Canada Agreement (USMCA), which allows for tariff-free trade among the three countries. This arrangement can facilitate manufacturing and export processes, making Canada an attractive location.
3. Skilled Workforce
Canada has a highly skilled workforce and established automotive culture, particularly in regions like Ontario, which has a strong history of automotive manufacturing. This availability of skilled labor can be a significant factor when manufacturers consider where to locate their operations.
4. Geographic Proximity
Canada’s geographic proximity to the U.S. allows for ease of transportation of parts and finished vehicles across the border. Manufacturing in Canada can efficiently serve both Canadian and U.S. markets.
5. Regulatory Environment
The regulatory environment in Canada can sometimes be more favorable or predictable than in certain areas of the U.S., making it easier for businesses to operate.
6. Investment Diversification
American manufacturers are diversifying their production locations to spread risk and dependence on any one region. By investing in Canada, automakers can mitigate risk associated with changes in U.S. labor markets or economic conditions.
7. Market Demand
As demand for vehicles evolves, manufacturers adjust their production strategies to align with market conditions. This may include expanding capacity in regions that are closer to their customer bases or that are experiencing growth in demand.
In summary, American car manufacturers have chosen to produce vehicles in Canada for various reasons, including cost considerations, access to trade agreements, a skilled workforce, and strategic diversification. While traditional automotive hubs like Detroit and Ohio remain important, manufacturers are adapting to changing economic and market conditions by expanding their operations to include locations like Canada.
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