Economy

How Germany Can Profit From Trump's Protectionism

Trump has threatened to levy punitive duties on German car imports. Companies like VW, Mercedes and others need to take that seriously, and come up with a Plan B.

Inside a German car factory in Leipzig
Inside a German car factory in Leipzig
Nikolaus Doll and Philipp Vetter

BERLIN — Trump had barely finished his oath of office when staff members posted a page on the White House website spelling out the new administration's "America First Foreign Policy." The "America First" focus, the text explains, will also apply to U.S economic policy. Bad news for America's trading partners, including Germany, with its export-orientated auto manufacturing industry.

The new president, it appears, does not intend to back off from the threats he uttered during his campaign. The White House website states, for example, that "President Trump is committed to renegotiating NAFTA." NAFTA is the free trade agreement between the U.S., Mexico and Canada that prohibits punitive customs duties on imports from the participating countries. But it is precisely these punitive duties that Trump keeps announcing.

With regards to Germany, Trump has repeatedly demanded, via Twitter as well as in newspaper interviews, that German car manufacturers produce their cars in the U.S. If not, he says he'll impose an import duty of 35%.

BMW wants to build a plant in Mexico. Mercedes is currently in the process of doing so, together with its business partner Nissan. And Audi is already manufacturing cars in Mexico. The majority of the cars produced in Mexico are supposed to be exported to the U.S. But if the punitive duties are applied to the imported cars, few people would be able to afford them any longer. The vehicles would become unsalable.

Period of reprieve

The "America First" page explains that internationally agreed trade agreements, such as NAFTA, will not stop the new administration from imposing punitive import taxes. "If our partners refuse a renegotiation that gives American workers a fair deal, then the President will give notice of the United States' intent to withdraw from NAFTA," the text reads.

Theoretically speaking, the U.S. can cancel a free trade zone. But this would have to be clarified through negotiations. Further trading hurdles would have to be discussed with the WTO. Still, the U.S. would be able to push some of its demands through after having renegotiated.

It is a lengthy process but, nonetheless, possible. Car manufacturers, to name but one industry, therefore have a period of reprieve before the potential "execution." And they should make use of that. "You have to take Donald Trump seriously, very seriously indeed," says auto expert Ferdinand Dudenhöffer. "That man is no paper tiger."

So far, German automakers have responded petulantly or not at all to the Twitter tsunami Trump unleashed regarding possible customs duties. VW, Audi and Mercedes have no intention on commenting on Trump's plans. And BMW said it will stick with its Mexico plans.

But the car industry will need a Plan B in case the U.S. does eventually raise a customs wall. The problem is that production in the U.S. is simply too expensive, especially compared to Mexico, where conveyor belt operators, for example, earn even less than their Chinese counterparts.

Fall back strategy

If the Mexican option is no longer available, the only realistic alternative for German car makers is a return to car construction kits, so-called CKD production. CKD means "Completely Knocked Down." In this process, cars are manufactured and delivered to certain markets as prefabricated kits that are then assembled at the final destination.

This production process has existed for years and car manufacturers fall back on it when they enter a market that does not warrant its own production sites, if the situation is unstable, or more flexibility is needed. It is also used in places where import duties are too high, because with CKD car kits, customs are only applied to the parts of the kits, not the entire car.

A factory in Mexico — Photo: FreemanAMG

CKD production enables manufacturers to reach the desired number of units fast and keeps production costs down. The production sites and local regions in which the parent companies (VW, Audi, BMW and Mercedes) are located profit from this because this is where the majority of the CKD cars would be produced. This would mean more work for these sites, more workers needed and suppliers providing more materials.

In the end, Germany would actually have an advantage as a car manufacturing country through Trump's anti-free-trade stance. And the U.S. would be left empty-handed. The job regeneration ordered from on high would not come to pass and Trump would not be able to do anything about it or legislate a law against this solution. It would be a paradigm change for the German car industry seeing as only 40% of the cars sold by German car companies are currently produced in Germany itself. The rest are built in cheaper locations abroad.

Time is of the essence

In any case, German car manufacturers, which have already been losing market share in the U.S., will have to react to Trump's threats given the potential consequences of punitive customs. If not, "they could take a nosedive," says Ferdinand Dudenhöffer.

The auto industry expert thinks that CKD production is the only feasible solution to the problem. "It would create a few jobs in the country of sale, which is a political statement. But the cost structure would be manageable as well," he says.

There would, however, be one disadvantage to CKD manufacturing. German cars would become a little more expensive in the county of sale due to the transport costs that would to be added to the retail price. But with all the new jobs Trump plans to create, Dudenhöffer expects that American consumers "will be able to handle" the price hike.

At any rate, German auto makers ought to act sooner rather than later, he urges. "Those who are late with their planning for CKD production will risk further losses in U.S. market shares," Dudenhöffer says. "Trump is a man who loves a fast deal."

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food / travel

The True Horrors Behind 7 Haunted Locations Around The World

With Halloween arriving, we have dug up the would-be ghosts of documented evil and bloodshed from the past.

Inside Poveglia Island's abandoned asylum

Laure Gautherin and Carl-Johan Karlsson

When Hallows Eve was first introduced as a Celtic festival some 2,000 years ago, bonfires and costumes were seen as a legitimate way to ward off ghosts and evil spirits. Today of course, with science and logic being real ghostbusters, spine-chilling tales of haunted forests, abandoned asylums and deserted graveyards have rather become a way to add some mystery and suspense to our lives.

And yet there are still spooky places around the world that have something more than legend attached to them. From Spain to Uzbekistan and Australia, these locations prove that haunting lore is sometimes rooted in very real, and often terrible events.

Shahr-e Gholghola, City of Screams - Afghanistan

photo of  ruins of Shahr-e Gholghola,

The ruins of Shahr-e Gholghola, the City of Screams, in Afghanistan

Dai He/Xinhua via ZUMA Wire


According to locals, ghosts from this ancient royal citadel located in the Valley of Bamyan, 150 miles northwest of Kabul, have been screaming for 800 years. You can hear them from miles away, at twilight, when they relive their massacre.

In the spring 1221, the fortress built by Buddhist Ghorids in the 6th century became the theater of the final battle between Jalal ad-Din Mingburnu, last ruler of the Khwarezmian Empire, and the Mongol Horde led by Genghis Khan. It is said that Khan's beloved grandson, Mutakhan, had been killed on his mission to sack Bamyan. To avenge him, the Mongol leader went himself and ordered to kill every living creature in the city, children included.

The ruins today bear the name of Shahr-e Gholghola, meaning City of Screams or City of Sorrows. The archeological site, rich in Afghan history, is open to the public and though its remaining walls stay quiet during the day, locals say that the night brings the echoes of fear and agony. Others claim the place comes back to life eight centuries ago, and one can hear the bustle of the city and people calling each other.

Gettysburg, Civil War battlefield - U.S.

photo of rocks and trees in Gettysburg

View of the battlefields from Little Round Top, Gettysburg, PA, USA

Unsplash/@nemo23


Even ghosts non-believers agree there is something eerie about Gettysbury. The city in the state of Pennsylvania is now one of the most popular destinations in the U.S. for spirits and paranormal activities sight-seeing; and many visitors report they witness exactly what they came for: sounds of drums and gunshots, spooky encounters and camera malfunctions in one specific spot… just to name a few!

The Battle of Gettysburg, for which President Abraham Lincoln wrote his best known public address, is considered a turning point in the Civil War that led to the Union's victory. It lasted three days, from July 1st to July 3rd, 1863, but it accounts for the worst casualties of the entire conflict, with 23,000 on the Union side (3,100 men killed) and 28,000 for the Confederates (including 3,900 deaths). Thousands of soldiers were buried on the battlefield in mass graves - without proper rites, legend says - before being relocated to the National Military Park Cemetery for the Unionists.

Since then, legend has it, their restless souls wander, unaware the war has ended. You can find them everywhere, on the battlefield or in the town's preserved Inns and hotels turned into field hospitals back then.

Belchite, Civil War massacre - Spain

photo of sunset of old Belchite

Old Belchite, Spain

Belchite Town Council


Shy lost souls wandering and briefly appearing in front of visitors, unexplainable forces attracting some to specific places of the town, recorded noises of planes, gunshots and bombs, like forever echoes of a drama which left an open wound in Spanish history…

That wound, still unhealed, is the Spanish Civil War; and at its height in 1937, Belchite village, located in the Zaragoza Province in the northeast of Spain, represented a strategic objective of the Republican forces to take over the nearby capital city of Zaragoza.

Instead of being a simple step in their operation, it became the field of an intense battle opposing the loyalist army and that of General Francisco Franco's. Between August 24 and September 6, more than 5,000 people were killed, including half of Belchite's population. The town was left in rubble. As a way to illustrate the Republicans' violence, Franco decided to leave the old town in ruins and build a new Belchite nearby. All the survivors were relocated there, but they had to wait 15 years for it to be complete.

If nothing particular happens in new Belchite, home to around 1,500 residents, the remains of old Belchite offer their share of chilling ghost stories. Some visitors say they felt a presence, someone watching them, sudden change of temperatures and strange sounds. The ruins of the old village have been used as a film set for Terry Gilliam's The Adventures of Baron Munchausen - with the crew reporting the apparition of two women dressed in period costumes - and Guillermo del Toro's Pan's Labyrinth. And in October 1986, members of the television program "Cuarta Dimensión" (the 4th dimension) spent a night in Belchite and came back with some spooky recordings of war sounds.

Gur Emir, a conquerer’s mausoleum - Uzbekistan

photo of Gur Emir (Tomb of Timur) i

Gur Emir (Tomb of Timur) in Samarkand, Uzbekistan

Chris Bradley/Design Pics via ZUMA Wire


The news echoed through the streets and bazaars of Samarkand: "The Russian expedition will open the tomb of Tamerlane the Great. It will be our curse!" It was June 1941, and a small team of Soviet researchers began excavations in the Gur-Emir mausoleum in southeastern Uzbekistan.

The aim was to prove that the remains in the tomb did in fact belong to Tamerlane — the infamous 14th-century conqueror and first ruler of the Timurid dynasty who some historians say massacred 1% of the world's population in 1360.

Still, on June 20, despite protests from local residents and Muslim clergy, Tamerlame's tomb was cracked open — marked with the inscription: "When I Rise From the Dead, The World Shall Tremble."

Only two days later, Nazi Germany invaded the Soviet Union, with the people of Samarkand linking it to the disturbing of Tamerlane's peace. Amid local protests, the excavation was immediately wrapped up and the remains of the Turkish/Mongol conqueror were sent to Moscow. The turning point in the war came with the victory in the Battle of Stalingrad — only a month after a superstitious Stalin ordered the return of Tamerlane's remains to Samarkand where the former emperor was re-buried with full honors.

Gamla Stan, a royal massacre - Sweden

a photo of The red house of Gamla Stan, Stockholm, Sweden

The red house of Gamla Stan, Stockholm, Sweden

Unsplash/@hkblind


After Danish King Kristian II successfully invaded Sweden and was anointed King in November 1520, the new ruler called Swedish leaders to join for festivities at the royal palace in Stockholm. At dusk, after three days of wine, beer and spectacles, Danish soldiers carrying lanterns and torches entered the great hall and imprisoned the gathered nobles who were considered potential opponents of the Danish king. In the days that followed, 92 people were swiftly sentenced to death, and either hanged or beheaded on Stortorget, the main square in Gamla Stan (Old Town).

Until this day, the Stockholm Bloodbath is considered one of the most brutal events in Scandinavian history, and some people have reported visions of blood flowing across the cobblestoned square in early November. A little over a century later, a red house on the square was rebuilt as a monument for the executed — fitted with 92 white stones for each slain man. Legend has it that should one of the stones be removed, the ghost of the represented will rise from the dead and haunt the streets of Stockholm for all eternity.

Port Arthur, gruesome prison - Australia

a photo of ort Arthur Prison Settlement, Tasmania, Australia

Port Arthur Prison Settlement, Tasmania, Australia

Flickr/Eli Duke


During its 47-year history as a penal settlement, Port Arthur in southern Tasmania earned a reputation as one of the most notorious prisons in the British Empire. The institution — known for a brutal slavery system and punishment of the most hardened criminals sent from the motherland— claimed the lives of more than 1,000 inmates until its closure in 1877.

Since then, documented stories have spanned the paranormal gamut: poltergeist prisoners terrorizing visitors, weeping children roaming the port and tourists running into a weeping 'lady in blue' (apparently the spirit of a woman who died in childbirth). The museum even has an 'incidence form' ready for anyone wanting to report an otherworldly event.

Poveglia Island, plague victims - Italy

a photo of Poveglia Island, Italy

Poveglia Island, Italy

Mirco Toniolo/ROPI via ZUMA Press


Located off the coast of Venice and Lido, Poveglia sadly reunites all the classical elements of a horror movie: plagues, mass burial ground and mental institute (from the 1920's).

During the bubonic plague and other subsequent pandemics, the island served as a quarantine station for the sick and anyone showing any signs of what could be Black Death contamination. Some 160,000 victims are thought to have died there and the seven acres of land became a mass burial ground so full that it is said that human ash makes up more than 50% of Poveglia's soil.

In 1922 a retirement home for the elderly — used as a clandestine mental institution— opened on the island and with it a fair amount of rumors involving torture of patients. The hospital and consequently the whole island was closed in 1968, leaving all the dead trapped off-land.

Poveglia's terrifying past earned it the nickname of 'Island of Ghosts'. Despite being strictly off-limits to visitors, the site has been attracting paranormal activity hunters looking for the apparition of lost and angry souls. The island would be so evil that some locals say that when an evil person dies, he wakes up in Poveglia, another kind of hell.

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