Trade experts warn that the once tightly interconnected U.S.-EU economic ties are under unprecedented strain. While Europe faces short-term pressures, the long-term consequences for the United States could be more severe.

BERLIN, March 14 (Xinhua) -- Since the current U.S. administration took office in January, a wave of trade protectionism has swept through Europe, sending ripples of concern across industries.

From government press briefings in Berlin to high-level discussions at the Munich Security Conference and the production lines of Germany's top automakers, the dominant topic is "tariffs."

The U.S. stance on trade is unsettling both Germany's economy and the wider European market, promoting political and business leaders across Europe to unite in advocating for free trade, multilateral cooperation and stability.

AUTOMAKERS FACE UNCERTAINTY

German automakers are among the hardest hit by the escalating trade tensions. The United States remains a key market for German automakers, including BMW, Volkswagen and Mercedes-Benz, which not only export vehicles but also operate major production facilities in the country, employing more than 138,000 workers.

"Free trade is essential for BMW," the company's spokesperson said in Munich. "Tariffs will drive up costs, burden consumers, and stifle innovation, ultimately dragging the entire industry into a negative cycle."

The big three German carmakers accounted for 73 percent of the EU's car exports to the United States last year, according to research platform JATO Dynamics. However, Washington's latest trade policies have cast a shadow over the automotive industry's outlook.

On March 4, as German auto supplier Continental AG released its annual results, the U.S. government announced steep tariffs on imports from Mexico and Canada, triggering an 11-percent plunge in Continental's stock, the worst performance on Germany's DAX index that day.

"We strongly oppose protectionist measures," Continental CEO Nikolai Setzer said. "This isn't just a challenge for us, it's a challenge for the entire industry."

Hildegard Mueller, president of the German Association of the Automotive Industry, also warned that unilateral tariff hikes would destabilize global supply chains and directly increase costs for consumers.

"German automakers have been deeply rooted in the U.S. market for years, creating thousands of jobs and helping the country become a key hub for global car exports. Now, trade barriers are not only hurting Europe but also weakening the U.S. own competitiveness," she said.

DEEPENING U.S.-EU TRADE TENSIONS

Trade tensions are beginning to weigh on Germany's economy. The Association of German Chambers of Industry and Commerce has warned that rising tariffs will increase export costs, disrupt supply chains and slow economic growth.

"If the situation escalates, Germany's exports to the United States could decline in 2025 for the first time in years," said Sebastian Dullien, an economist at the German Institute for Macroeconomic Research.

"A global trade war could shrink the German economy by more than 1 percent, potentially putting around 300,000 jobs at risk," Dullien said.

The fallout extends beyond Europe. According to the American Chamber of Commerce to the EU, two-thirds of U.S. firms expect the current trade policies to negatively impact their European business, further straining transatlantic trade relations.

Market trends are already signaling these concerns. Data from Germany's Federal Motor Transport Authority showed that electric vehicle registrations surged 31 percent in February. Yet, U.S. automaker Tesla saw its new registrations in Germany plummet 76 percent in February to just 1,429 units, as local competition gained ground.

The tariffs may appear symbolically in line with the current U.S. administration's "America First" policy, but will ultimately harm U.S. economic interests, said Julian Hinz, head of the Research Center Trade Policy at the Kiel Institute for the World Economy.

LOSE-LOSE SCENARIO

At this year's Munich Security Conference, European leaders warned that prolonged trade tensions could weaken transatlantic ties and trigger broader economic fallout.

"U.S. policies are shaking the foundations of transatlantic relations," German President Frank-Walter Steinmeier said.

European Commission President Ursula von der Leyen cautioned that if the EU faces "unjustified tariffs," Brussels will be forced to take measures to protect European industries.

The uncertainty is weighing heavily on small and medium-sized businesses.

Trade experts warn that the once tightly interconnected U.S.-EU economic ties are under unprecedented strain. While Europe faces short-term pressures, the long-term consequences for the United States could be more severe.