Don’t say they didn’t warn you.
Last weekend, Germany’s Welt am Sonntag reported that BMW had written a letter to Wilbur Ross imploring him not to slap tariffs on auto imports.
“It seems that the threat to impose these sanctions is designed to achieve certain economic goals,” BMW said, before adding that some 120,000 American jobs have been created by BMW’s investment of nearly $9 billion in a Spartanburg, South Carolina, plant.
As the Greenville News reported on Thursday (or, more to the point, just hours ahead of the midnight imposition of Trump’s tariffs on $34 billion in Chinese goods and the immediate retaliatory measures from Beijing), “a study by the U.S. Chamber of Commerce projects South Carolina will be the eighth-most affected state by tariffs from Canada, China, the European Union and Mexico imposed in response to new tariffs from President Donald Trump’s administration.”
That data comes from the U.S. Chamber of Commerce and you can find the full one-pager for South Carolina embedded below this post.
Well, now that Trump has pulled the trigger and China has responded as expected, BMW is out saying that the company cannot absorb the impact from China’s countermeasures on vehicles made in Spartanburg.
So, they’re going to raise prices in China. To wit, from a statement:
[We are] currently calculating related necessary pricing increases for U.S.-made models imported into China and will announce them at a later stage.
As Reuters notes, “BMW exports high-margin X4, X5 and X6 SUV and crossover models to China [and] last year, [they] shipped more than 100,000 vehicles from the United States.”
Quick question for all the MAGA fans out there: What do you think comes next in this scenario?
Let me give you a hint: BMW will attempt to pass the cost on to consumers in China and if that doesn’t work (i.e., if they lose market share), they’ll either swallow the tariffs (i.e., accept lower margins) or they’ll simply stop making these vehicles in the U.S.
And look, if you don’t believe me, just ask BMW itself, which said this in the same letter to Wilbur Ross cited above:
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.
There you go. Sorry, South Carolina BMW workers!
But you don’t mind, right? After all, you are a patriot, aren’t you?
Better times: Ca. 2010, celebrating the one millionth X5 SUV built at the South Carolina plant