BERLIN -- U.S. President Trump told French President Emmanuel Macron he would block German luxury carmakers from the U.S. market, German magazine Wirtschaftswoche reported on Thursday.
Citing several unnamed European and U.S. diplomats, the magazine reported that Trump told Macron in April he would stick to his trade policy with the aim of preventing Mercedes-Benz models from rolling down Fifth Avenue in New York.
Macron's administration in Paris declined to comment on the report while a U.S. Embassy spokesman in Berlin referred questions to Washington.
Earlier this month, the Trump administration opened a trade investigation into whether vehicle imports had damaged the U.S. auto industry. That could lead to tariffs of up to 25 percent on the same "national security" grounds used to impose U.S. steel and aluminum duties in March.
Imposing such a tariff would destroy the business case for German automakers to import into the U.S., and cause a burden of 4.5 billion euros for German premium manufacturers, analysts at Evercore ISI said in a note last week.
German automakers control 90 percent of the U.S. premium auto market, with BMW owning the Rolls-Royce, Mini and BMW brands while Daimler has Mercedes-Benz and Volkswagen Group controls Bentley, Bugatti, Porsche and Audi.
Audi and Porsche are seen to be particularly vulnerable because they do not have U.S. factories, while Mercedes-Benz and BMW have large established plants which could more easily allow them to expand local production capacity if imports were curtailed.
Daimler, BMW and Audi declined comment. Porsche was not immediately available for comment.
Within the European Union, Germany is the biggest exporter of cars to the United States.
The EU exported cars worth 37 billion euros ($43 billion) to the U.S. last year while imports from the U.S. were worth 6.2 billion euros ($7.3 billion), according to Brussels-based industry association ACEA.
Germany's auto industry association, VDA, says its members exported 657,000 vehicles to North America last year, with total exports of vehicle components, cars, engines, as well as second-hand vehicles totalling 31.2 billion euros in 2016. Imports from the U.S. to Germany amounted to 7.4 billion euros, meaning a trade deficit of 23.8 billion euros, the VDA's latest available figures show.
German automakers built 804,000 cars in U.S. plants last year.
Trump is expected to decide on Thursday whether to end an EU exemption from tariffs on U.S. imports of steel and aluminum, a move Germany has warned could lead to a damaging trade war.
Berlin has also reacted angrily to a U.S. vehicle imports investigation, which could lead to tariffs of up to 25 percent on the same "national security" grounds that Washington used to impose metals duties in March.
Late on Wednesday, talks to avoid a transatlantic trade war showed no sign of a breakthrough.
Trump has railed against German carmakers before and in early 2017, in an interview with German newspaper Bild, had said he would impose 35 percent tariffs on imported cars. At the time, the president called Germany a great car producer but said that the business relationship with the United States was an unfair one-way street.
Berlin has reacted angrily to the U.S. vehicle imports investigation. German Finance Minister Olaf Scholz told Reuters there were no signs of a de-escalation and that the EU response to any tariffs must be "clear and strong and smart."
But the head of Germany's BDI industry association, Dieter Kempf, on Thursday called for prudence in the growing trade tensions between the EU and the U.S. If the EU imposes countermeasures, it must expect Trump to come up with further measures, he told Deutschlandfunk radio.
Trump's auto tariff is a test of Franco-German solidarity since French carmakers have hardly any U.S. sales, while German carmakers generate up to 30 percent of global sales there.