Germany urges strong response to Trump's auto tariffs

Germany's outgoing leadership on Thursday urged a strong European Union reaction to the US President Donald Trump's decision to slap tariffs on all imported cars.

Trump announced on Wednesday that a 25% tariff on all vehicles imported to the US would kick in on April 2.

"US President Trump's decision is wrong," outgoing chancellor Olaf Scholz said in a statement.

"The US has chosen a path at whose end lie only losers, since tariffs and isolation hurt prosperity, for everyone."

Germany's outgoing vice chancellor and economy minister, Robert Habeck, said Europe must not back down.

"It must be clear that we will not give in to the US. We need to show strength and self-confidence," he said.

European exporters consider retaliatory action

Trump has claimed auto tariffs aim to protect US businesses and boost domestic manufacturing, but Habeck it would be "bad news for he US," along with German carmakers, the German economy, and the EU.

German Foreign Minister Annalena Baerbock said Europeans do not want the trade war but would protect their own markets. 

"Anyone who uses a wrecking ball to tear down an entire house just because the roof needs retiling is left with ruins that cannot be easily rebuilt," Baerbock said.

Inga Fechner, a senior economist at ING Germany, told DW the impact on Germany would be "quite substantial.

"We need to consider the tariffs that are applied to cars imported from the European Union to the United States, but then, many German car manufacturers also do have facilities in Mexico, so they're also getting hit from that side."

European Commission President Ursula von der Leyen described Trump's tariffs as "bad for businesses, worse for consumers."

Elsewhere in Europe, France's Finance Minister Eric Lombard said the "only solution" would be for the EU to raise tariffs on US products in response.

French president Emmanuel Macron said it was the wrong time to impose tariffs. "Imposing tariffs disrupts value chains, creates an inflationary effect in the short term, and destroys jobs. So it's not good for the US or European economies," he said.

Meanwhile, the UK said it was not planning any retaliatory measures "at the moment."

"We are looking to secure a better trading relationship with the United States. I recognize that the week ahead is important. There are further talks going on today, so let's see where we get to in the next few days," said Rachel Reeves, Britain's finance minister.

British Prime Minister Keir Starmer, however, said afterwards that "all options remain on the table" when it comes to US tariffs.

Top car exporters to the US warn of wider impact

Half of the cars sold in the United States are manufactured domestically. Of the imported vehicles, about half come from Mexico and Canada, with Japan, South Korea, and Germany also playing major roles as suppliers.

Japan called the tariffs "extremely regrettable." Japanese Prime Minister Shigeru Ishiba reiterated that he wants Japan to be exempt from such tariffs.

"Japan has made significant investments and significant job creation, which doesn't apply to all countries ... We are the number one country in investment in the United States," Ishiba added. He said failing that, "all options are naturally subject to consideration."

South Korea's trade and industry minister Ahn Duk-geun held an emergency meeting with major automakers.

"The government will work closely with the industry to devise countermeasures and, in coordination with other ministries, announce a comprehensive emergency response plan for the auto sector in April," Ahn said.

The latest levies will be in addition to those Trump already imposed on neighboring countries.

Canadian Prime Minister Mark Carney was meeting his cabinet on Thursday to discuss what he called a "direct attack" on his country's workers.

Mexico said there should be no tariffs within the United States-Mexico-Canada trade agreement.

"If we are moving to a system of such high tariffs, what we have to look for is preferential treatment for Mexico," Mexican Economy Minister Marcelo Ebrard said. 

Musk said cost of tariffs 'not trivial' for Tesla 

Trump said the tariffs could be net neutral for Tesla, the electric vehicle company led by one of his major backers, Elon Musk.

"To be clear, this will affect the price of parts in Tesla cars that come from other countries. The cost impact is not trivial," Musk wrote on X.

The Center for Automotive Research estimated that US tariffs could increase car prices by thousands of dollars and impact jobs.

Peter Navarro, Trump's senior trade counselor, dismissed this, saying "foreign trade cheaters" turned America's manufacturing sector into a "lower wage assembly operation for foreign parts."

Italian sportscar maker Ferrari on Thursday said it would increase prices by up to 10% on all models imported to the US.

Edited by: Wesley Rahn, Zac Crellin