President Trump’s sweeping tariffs on automobiles drew a sharp reaction on Thursday from leaders in Germany and France, who called on the European Union to hit back firmly against measures that they said would harm the United States and Europe, and global trade as a whole.
Mr. Trump announced on Wednesday that he would impose a 25 percent tariff on cars and car parts shipped to the United States, putting pressure on America’s top trade allies around the globe. The tariffs, which he said were permanent, will take effect on April 3.
President Emmanuel Macron of France said Thursday that he had told Mr. Trump the day before that tariffs were “not a good idea.” France would work with the European Commission on a “riposte,” he added, the goal of which would be “to find an accord to dismantle the tariffs” and getting the U.S. president to “reconsider.”
In Germany, whose auto industry is a huge exporter to the United States and faces a blow, the economy minister, Robert Habeck, said it was “crucial that the E.U. delivers a decisive response to the tariffs,” adding: “It must be clear that we will not back down.”
In a statement, Germany’s chancellor, Olaf Scholz, called Mr. Trump’s tariff decision “wrong.” “The U.S. is thus embarking on a path that will only end with losers,” he said. “Because tariffs and isolation cost prosperity for everyone.”
The American market is crucial for Germany’s biggest automakers, including BMW, Mercedes-Benz and Volkswagen. German automakers have long been a target of Mr. Trump’s ire.
Both Mr. Habeck and Mr. Macron warned that the tariffs would hit growth and supply chains on both sides of the Atlantic and fan inflationary pressures in the United States. Mr. Macron added that the U.S. stock market had sent a clear signal that “it’s not good economic policy.”
The announcements “are bad news for German automakers, for the German economy, for the E.U., but also for the U.S.,” Mr. Habeck said, adding that Germany would support the European Commission, the European Union’s executive arm, as it negotiates with the United States to find a solution that averts a tariff spiral.
Mr. Trump’s announcement, which will apply to auto parts and finished vehicles that are shipped to the United States, sent shares of German automakers tumbling on Thursday. Shares of the Italian luxury carmaker Ferrari and the Swedish manufacturer Volvo also slumped. The rout encompassed European auto parts makers as well as the tire producers Pirelli and Continental.
The German carmaker BMW said in a statement Thursday that a trade war “would not have any benefits,” and called on the European Union and the United States to “promptly find a trans-Atlantic deal that creates growth and prevents a spiral of isolation and trade barriers.”
BMW, Mercedes-Benz and Volkswagen vehicles constitute about 73 percent of the European Union’s automotive exports to the United States, according to a report from JATO Dynamics, a research firm.
Mexico is the largest country of origin for vehicles made by Volkswagen, Europe’s largest car manufacturer, JATO said in the report. But the European Union is the largest country of origin for Mercedes-Benz vehicles sold in the United States.
The prospect of a drawn-out trade war would have wide-ranging effects. “The impacts of this move are clearly detrimental, and are likely to trigger further and fresh retaliatory actions by affected nations,” analysts at Bernstein said in a note to clients.
European automakers have limited capacity to expand production at their U.S. factories to avoid tariffs, the analysts noted, so they are faced with the choice of absorbing the cost of the tariffs or passing them on to consumers. Prices could rise up to $12,000 per car, and “the resulting inflation could pressure the Trump administration into backing down,” they wrote
Porsche, a unit of Volkswagen, imports all of its vehicles sold in the United States and would be more sensitive to tariffs than its European counterparts, analysts at Barclays said in a research note this month before the tariffs were announced.
But tariffs would have little affect on the bottom line of a luxury brand like Ferrari, which manufactures all of its cars at its factory in Maranello, Italy. The automaker said Thursday it would raise the price of certain models up to 10 percent to offset the cost of the tariffs.
Mr. Trump’s tariffs are hitting the European auto industry at a time when it is facing a transformation and increased international competition, the European Automobile Manufacturers’ Association said in a statement.
“European automakers have been investing in the U.S. for decades, creating jobs, fostering economic growth in local communities, and generating massive tax revenue for the U.S. government,” said the group’s director general, Sigrid de Vries.
Hildegard Müller, the president of the German lobby group VDA, called the tariffs “a fatal signal for free and rules-based trade.”
“The risk of a global trade war, with negative consequences for the world economy and growth, prosperity, jobs and consumer prices, is very high,” Ms. Müller said in a statement.
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