Cars and Drivers

BMW Warns of US Layoffs Under Tariff Plan

Douglas A. McIntyre

Published: July 1, 2018 7:01 am

Last Updated: January 11, 2020 9:37 pm

BMW is the latest in a long line of companies, based in both the U.S. and overseas, which claim tariffs will severely damage their businesses. A BMW letter to Commerce Secretary Wilber Ross says that BMW may have to cut both American investment and people

In the letter, BMW management wrote tariffs on vehicles and parts could have dire consequences:

“All of these factors would substantially increase the costs of exporting passenger cars to these markets from the United States and deteriorate the market access for BMW in these jurisdictions, potentially leading to strongly reduced export volumes and negative effects on investment and employment in the United States.”

General Motors Company (NYSE: GM) has made similar comments. In some cases, the tariffs have already damaged companies. The Mid-Continent Nail Corporation said steel tariffs have triggered layoffs and may even take the company under.

While the BMW comments are not as extreme in terms of risk to the company, it is a much largest employer that the nail company and the effects regarding employment and dollars invested in its workforce, promotion, sales levels, its dealer network, and manufacturing would be much more significant in terms of capital into the American economy.

The BMW argument is not, ironically, for cars made in Europe and shipped to the U.S. Rather, the German car maker says the tariff would hurt the sales of cars it makes in the U.S. and exports. However, the Trump Administration may hurt BMW two ways. It has considered adding tariffs to Germany luxury cars imported to the U.S. BMW is being hit both coming and going.

No one knows whether tariffs will add jobs to the American economy, or cut them. The Administration believes that if foreign competition is throttled, U.S. companies will have less competition and thrive. BMW argues otherwise, which is in its best interests. However, there is a chance that its claims are valid and that some number of jobs in America will disappear.