Other major business groups also are weighing in against possible auto tariffs, with the policy head of the U.S. Chamber of Commerce on Sunday calling it "a bad idea".
President Trump has threatened to reignite a transatlantic trade war by imposing hefty tariffs on European vehicle imports.
The Commerce Department began its investigation a year ago under the same law used to impose higher tariffs on steel and aluminum. "And these cars are built in the U.S.", Merkel added.
The renewed threat of auto duties calls into question a tentative truce reached in July.
Trump has 90 days to decide whether to adopt the recommendations and introduce tariffs on imported vehicles and auto parts.
John Bozzella, president of the Association of Global Automakers, criticized the lack of transparency in the policy making process, as any details of the Commerce Department's recommendations haven't been disclosed. "President Juncker trusts President Trump's word".
'The European Union will stick to its word as long as the U.S. does the same, ' spokesperson Margaritis Schinas said.
According to the European Commission, a 25 percent tariff would increase the cost of an EU-made vehicle in the United States by 10,000 euros ($11,300).
China accuses US of trying to block its tech development
The advice suggests the United Kingdom may be reticent to follow other nations in banning Huawei from supplying 5G technology. The U.S. has accused her of fraud and violating global sanctions against Iran, which she and Huawei have both denied.
The Munich-based IFO Institute's Center for International Economics calculates that an import fee of that size would cut German vehicle sales to the U.S.by nearly 50 percent, or about 17 billion euros, eroding total auto exports by 7.7 percent. As a result, European retaliatory duties would target a larger amount of US exports to Europe.
Major automaker groups said a year ago the cumulative effect for the United States would be an $83 billion annual price increase and argued there was no evidence auto imports posed a national security risk. That would especially affect German brands such as Volkswagen, Porsche and Mercedes-Benz.
"We believe the imposition of higher import tariffs on automotive products under Section 232 and the likely retaliatory tariffs against USA auto exports would undermine - not help - the economic and employment contributions that FCA US, Ford and General Motors make to the USA economy", says Blunt. Total European auto exports would fall by 18.4 billion euros, or 7.7 percent.
She noted that German automaker BMW's biggest plant is in SC.
"Look, we're proud of our cars and we should be allowed to be".
Americans planning to buy a auto this year may have to contend with pricier wheels.
The U.S. Commerce Department is expected to issue soon an opinion on whether auto imports endanger U.S. national security enough to justify import taxes.