Trump Slams NATO, Floats Russia Nuke Deal in European Interview

Donald Trump called NATO obsolete, predicted that other European Union members would follow the U.K. in leaving the bloc, and threatened BMW with import duties over a planned plant in Mexico, according to two European newspapers which conducted a joint interview with the president-elect.

Trump, in an hourlong discussion with Germany’s Bild and the Times of London published on Sunday, signaled a major shift in trans-Atlantic relations, including an interest in lifting U.S. sanctions on Russia as part of a nuclear weapons reduction deal.

Quoted in German by Bild from a conversation held in English, Trump predicted that Britain’s exit from the EU will be a success and portrayed the EU as an instrument of German domination designed with the purpose of beating the U.S. in international trade. For that reason, Trump said, he’s fairly indifferent to whether the EU stays together, according to Bild.

The Times quoted Trump as saying he was interested in making “good deals with Russia,” floating the idea of lifting sanctions that were imposed as the U.S. has sought to punish the Kremlin for its annexation of Crimea in 2014 and military support of the Syrian government.

‘Some Good Deals’

“They have sanctions on Russia -- let’s see if we can make some good deals with Russia,’’ Trump said, according to the Times. “For one thing, I think nuclear weapons should be way down and reduced very substantially, that’s part of it.’’

Trump’s reported comments leave little doubt that he’ll stick to campaign positions and may in some cases upend decades of U.S. foreign policy, putting him fundamentally at odds with German Chancellor Angela Merkel on issues from free trade and refugees to security and the EU’s role in the world.

Repeating a criticism of NATO he made during his campaign, Trump said that while trans-Atlantic military alliance is important, it “has problems.”

“It’s obsolete, first because it was designed many, many years ago,” Trump said in the Bild version of the interview. “Secondly, countries aren’t paying what they should” and NATO “didn’t deal with terrorism.” The Times quoted Trump saying that only five NATO members are paying their fair share.

While those comments expanded on doubts Trump expressed about the North Atlantic Treaty Organization during his campaign, he reserved some of his most dismissive remarks for the EU and Merkel, whose open-border refugee policy he called a “catastrophic mistake.”

Brexit Praise

In contrast, Trump praised Britons for voting in 2016 to leave the EU. People and countries want their own identity and don’t want outsiders coming in to “destroy it,” he said. The U.K. is smart to leave the bloc because the EU “is basically a vehicle for Germany,” the Times quoted Trump as saying.

“If you ask me, more countries will leave,” he said.

Trump told the Times that he plans to quickly pursue a trade deal with the U.K. after taking office and will meet with British Prime Minister Theresa May soon.

“We’re gonna work very hard to get it done quickly and done properly. Good for both sides,” he said. “We’ll have a meeting right after I get into the White House and it’ll be, I think we’re gonna get something done very quickly.”

While Trump blamed Brexit on an influx of refugees he said that Britain was forced to absorb, the U.K.’s number of asylum applications in 2015 was a fraction of the 890,000 refugees who arrived in Germany that year at the peak of Europe’s migrant crisis.

Build in U.S.

With Merkel facing an unprecedented challenge from the anti-immigration Alternative for Germany as she seeks a fourth term this fall, Trump was asked whether he’d like to see her re-elected. He said he couldn’t say, adding that while he respects Merkel, who’s been in office for 11 years, he doesn’t know her and she has hurt Germany by letting “all these illegals” into the country.

In line with his threats against other automakers, Trump said Bayerische Motoren Werke AG would face a 35 percent import duty for foreign-built BMW cars sold in the U.S. BMW should scrap plans to open a new plant in Mexico and build the factory in the U.S. instead, he was quoted as saying. BMW plans to start building 3 Series sedans at San Luis Potosí in 2019.

Other Trump comments, according to Bild:
  • The Bush administration’s decision to invade Iraq may have been the worst in U.S. history
  • Jared Kushner, Trump’s son-in-law, is a natural talent who will bring about an accord with Israel
  • Trump plans to keep using social media, including Twitter, once he’s in the White House to sidestep the press and communicate directly with his followers
  • People entering the U.S. will face “extreme” security checks, possibly including some European nationals
Rush-hour traffic passes through Washington, U.S., December 20, 2016. REUTERS/Joshua Roberts - RTX2VXTJ

Trump says U.S. automakers should make products in the country

U.S. President-elect Donald Trump said on Sunday that American automakers should starting assembling motor vehicles in the United States if they wanted to do business in country.

"Car companies and others, if they want to do business in our country, have to start making things here again. WIN!" Trump tweeted.

The biggest challenge for automakers in the 21st century is to balance old and new

Coming off another record-setting US sales year (17.55 million vehicles sold), and the roll out of a host of new electric and autonomous cars at CES and the Detroit auto show, the auto industry has rarely looked better.

And although Donald Trump has taken shots at car companies for contemplating new factories in Mexico, the industry overall is looking forward to what it thinks will be “pro-growth” policies under the new administration, coupled with a break on stringent EPA-mandated fuel-economy standards.

The good times mask a major challenge, however, as carmakers struggle to balance their legacy businesses with new technologies and consumer-behavior patterns.

The consulting firm McKinsey & Company has taken a deep dive into the issue with a recently published study, “Electrifying insights: How automakers can drive electrified vehicle sales and profitability.”

The study’s authors are unflinching. “[A]utomakers face a difficult challenge: They must strike the right balance between selling enough [electric vehicles] to comply with tightening regulatory fleet emissions and fuel economy targets, while also preventing the incremental cost of adding battery packs from cannibalizing corporate profits,” they wrote.

“At the same time, automakers cannot lose focus on [gas-powered] models, which are often more profitable.”

The problem with electric cars
It really is that simple: the electric-vehicle market is improving and growing, but it remains tiny — only about 1% of sales globally — and although EVs help in complying with regulations, the money is made with engine technologies that have been around for over a century.

Autonomous vehicles and ride-hailing services such as Uber and Lyft that could reduce the need to own a car add another layer of complexity.

“EV penetration is disappointing,” said Stefan Knupfer, a McKinsey partner and the study’s lead author. “Consumers are still unclear and nervous, and not well informed.”

He added that there are some profound baked-in problems with the electrification piece.

“A battery good for 300 miles of range” — what buyers appear to be insisting on “is very expensive, so [automakers] face a significant loss to sell the car.”

On top of that, compared with gas-powered vehicles, with their extensive fueling network and ability to easily travel long distances, according to Knupfer “a lot of compromises are being asked of customers” who might want to make the switch to an electric car.

The temptation for car companies to avoid taking risks with new mobility paradigms is obviously real, but McKinsey doesn’t think automakers should give and take the easy route.

“Cracking the code for EV profitability will be critical for automakers as they roll out broader e-mobility strategies and new EV models to meet emission and fuel economy targets and consumer needs for range, convenience, and affordability,” the study’s authors wrote.

Cities of the future
 A critical driver in Knupfer’s estimation is the worldwide trends of urbanization. McKinsey identified four “megatrends” in the study — autonomous, connected, electrified, and shared  — which is said will have “game-changing” impacts.

“All of the trends cling together,” Knupfer said, “and in an urban environment, they’re more serious.”

In his view, the disruption of traditional transportation in cities “is going to happen.” He called it the “the biggest change” he’s seen, noting that “any big change has winners and loser, which is an opportunity for new entrants.”

And a problem that legacy players will have to grapple with. “You’ll be in trouble if you’re not investing,” said. “There are too any players out there, and consumers taking up trends faster than expected.”

He pointed specifically to self-driving cars. Just a year or two ago, these might have seen like a distance science-fiction dream, but in 2016 numerous old-school automakers and several Silicon Valley startups began to push a case for the more rapid arrival of autonomous cars on our roads. Suddenly, Google’s self-driving cars — now operating under a Alphabet company called Waymo — looked to have a lot future company.

Solving the slow-growth riddle

For economists, self-driving cars could provide a massive boost to productivity, forcing developed economies out of a low-growth rut that they’ve been in since the financial crisis.

For Knupfer and his fellow researches, this is important.

“It’s going to be a significant productivity boost,” he said, citing the simplicity if EVs versus gas-powered cars — it’s just easier to build them.

He also pointed to the ability that autonomous vehicles have to restore time now lost to commuting. “If you don’t have to drive in cities, productivity will go up.”

The difficulty for the traditional auto industry, as well as new entrants, is that they must live in three business worlds almost simultaneously: the profitable past, the transitional present, and the uncertain future.

But McKinsey say that “trends are likely to drive more change over the next decade than has occurred over the last 50 years,” so everyone who’s in the business of transportation needs to plan carefully, invest wisely — and prepared to tear up the playbook at a moment’s notice.

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