German-made cars could become more expensive for potential American buyers after the White House unveiled 25% tariffs on imported cars and car components.
US President Donald Trump says the move will bolster the American automotive industry, but stocks in General Motors and Ford tumbled following the announcement.
German Economy Minister Robert Habeck said the EU must respond firmly — a sentiment echoed by the European Commission.
"What we will do from this stage on is prepare ourselves for, as I mentioned, a proportionate, firm, well-calibrated, well-timed response. We don't want to have to respond. But at the risk of sounding like my three-year-old son, they started it," said EU Commission spokesman Olof Gill.
Bad news for Europe and the US
Germany is the fifth-largest exporter of cars to the US globally and the largest in Europe. The industry is worried, but says Americans will also feel the negative impacts.
"This is bad for international trade, growth, prosperity, and jobs — not only in Germany and Europe but also in the US. Tariffs and protectionism lead to higher prices globally, causing consumers to bear the brunt of inflation," said Hildegard Müller, president of the German Association of the Automotive Industry.
Trump has threatened much higher tariffs if Europe joins forces with Canada to respond and impose what he calls economic harm on the US.
And despite his history of dramatic U-turns on tariffs, Trump said these levies would be permanent.