German minister, autos lobby call for urgent EU-US talks over tariffs

BERLIN, March 27 (Reuters) - Germany's economy minister and its autos association slammed Donald Trump's newly-announced 25% tariff on imported vehicles to the U.S. as bad for European and U.S. economies, calling for urgent negotiations to ward off a spiralling trade war.

Shares in Volkswagen VOWG_p.DE, the most exposed among German carmakers to tariffs because of its large supply base in Mexico and lack of U.S. production for its Audi and Porsche brands, dropped 5.1% in pre-market trade.

Other autos stocks including Mercedes-Benz, BMW, and Daimler Truck dropped around 3.5%, with autos supplier Continental CONG.DE down 2.9%.

"The EU must now give a firm response to the tariffs - it must be clear that we will not back down in the face of the USA," Economy Minister Robert Habeck said.

Germany's VDA car lobby called the new levies a "fatal signal" for free, rules-based trade, warning they would harm companies as well as global supply chains.

"The German automotive industry is calling for immediate negotiations between the U.S. and the EU on a bilateral agreement," VDA president Hildegard Mueller said in a statement.

Still, research by the IfW economic institute found that Germany would not be the hardest-hit economy by U.S. tariffs, the FAZ newspaper reported.

The institute estimates that German gross domestic product will be 0.18% weaker in the first year after the introduction of the tariffs in real terms, compared with a 1.81% hit in Mexico and a 0.6% blow in Canada.

"Overall, the export losses are limited, as cars are often produced close to the sales market," IfW trade economist Julian Hinz said in comments carried by FAZ.