In 2018, 1.8 million passenger cars and light trucks built in the United States were exported. By dollar value, the exported vehicles accounted for $53.22 billion of U.S. international trade, and the leading manufacturer of U.S. auto exports was, for the fifth straight year, German automaker BMW.

BMW’s X-model sport utility vehicles (X3, X4, X5, X6 and X7) are built at the company’s manufacturing facility in Spartanburg, South Carolina. The plant exported 234,689 units last year with an approximate dollar value of more than $8.4 billion, or nearly 16% of the year’s total automobile U.S. export value. BMW exported more than 66% of the 356,749 cars and light trucks built at Spartanburg last year. The rest were sold in the United States.

The numbers are down year over year, not just for BMW but for all U.S. auto exports. The dollar value of 2018 exports was down 6.4% and volume declined by 9.0%.

Worse for BMW, Mercedes-Benz and Volkswagen, all of which also build cars in the United States, is a threatened 25% tariff on vehicles imported from Europe into the United States. The Trump administration is considering a plan to declare automobile imports from Europe a threat to national security. The current reciprocal tariff on imports is 2.5%.

By one estimate, a 25% U.S. tariff on German-built imports would slice nearly 50% from German car exports to the United States and cost Germany about $19.2 billion. Global exports of German-built vehicles would drop by about 7.7% (around $20.7 billion).

Brexit, however, represents a far bigger threat to the German auto industry. If British Prime Minister Theresa May cannot win support for a proposed deal, a no-deal Brexit could have a “potentially catastrophic” effect on the European auto industry, according to the European Automobile Manufacturers Association (ACEA). Nearly 40% of vehicles manufactured in European Union countries are exported, while the United Kingdom exports almost 82% of vehicles built in that country.

Germany is both the leading exporter to and importer from Britain, although the balance is heavily skewed toward exports. If a no-deal Brexit is concluded, Germany’s $23 billion export market in the United Kingdom may all but collapse.

That’s why BMW and the other German automakers are so concerned over possible tariffs on German imports. Retaliatory tariffs are certain to be imposed by affected countries, including China. Exports of U.S.-built German-branded light vehicles fell from 150,000 in 2017 to 95,000 in 2018, and that revenue stream would all but dry up if U.S. tariffs on cars and trucks are put into effect.

BMW has been the top exporter by value of U.S.-built vehicles for five consecutive years. The company does not want to see that streak end.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.