The United States leader threatened action on European car imports back in February, should the US not be able to reach a trade deal with the European Union. Speaking to reporters at a White House meeting with Austrian Chancellor Sebastian Kurz, Mr Trump said the auto tariffs were something his administration was considering. It was reported at the time that the US leader was considering tariffs of around 25 percent on imported cars and auto parts over fears a trade imbalance is threatening national security. Speaking to CNBC, US Commerce Secretary Wilbur Ross said President Trump is still “giving very serious thought” to the potential tariffs, which could hit £41billion worth of exports.
It is feared Germany, one of the largest direct car exporters to the US, could see its automotive sector fall as much as 12 percent, according to Christoph Schon, executive director of Axioma.
As well as this, the German stock market could tumble by as much as six percent, he predicted.
Germany’s gross domestic product (GDP) currently sees 47 percent made up of exports, with the European Union being the largest car exporter in the world, meaning any hit to this sector could mark a substantial dent in the economy.
Mr Ross also added President Trump is poised to proceed with additional tariffs on China, with the two economic powerhouses remaining locked in their increasingly hostile trade war.
President Trump recently ramped up tariffs on a list of $200billion worth of Chinese imports from 10 percent to 25 percent.
The American leader has also vowed to slap 25 percent tariffs on an additional $300billion worth of Chinese goods unless the two sides reach an agreement.
China has retaliated to US aggression by raising duties on a revised list of $60billion worth of US products to as high as 25 percent.
Mr Ross said: “The US market is the healthiest auto market in the world right now.
“The Chinese market has been crumbling, European market is stumbling as well.
“In the American market, the big cars are what sell best in the States, and those are the highest profit margin cars, so there is a big logic, independently of what actions we are taking on trade, for more capital investment by foreign makers in the U.S.
“We are just accelerating that with the potential tariffs.”
US President Donald Trump and China’s President Xi Jinping could be scheduled for an awkward encounter at the G20 summit in Japan later this month.
President Trump has said he would meet with President Xi at the summit, although China has not confirmed the meeting.