US tariffs are affecting up to €67bn of EU automotive industry exports, the majority of which are coming from Germany. BMW, Volkswagen and Mercedes must choose between pausing shipments or absorbing tariff costs.

President Trump’s trade war adds another challenge to the incoming government’s attempts to revive Europe’s biggest economy.

Exports-dependent Germany is the only G7 economy that has contracted for the last two years. The further "reciprocal" tariffs announced by U.S. President Donald Trump on April 2 and suspended on Wednesday could still deal a major blow to Europe's biggest economy, the institutes said, possibly "doubling the negative effects."