Automobiles are on a truck for delivery to a car lot in Queens, New York, U.S., May 24, 2018. REUTERS\/Shannon Stapleton<\/strong><\/span><\/p>\n

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(Reuters) –<\/strong> A U.S. threat that it may introduce tariffs on foreign auto imports drew strong criticism on Thursday from the country\u2019s main business lobbying group, which warned of a \u201cstaggering\u201d blow to the industry and the prospect of a global trade war.<\/p>\n

President Donald Trump\u2019s administration opened a trade investigation on Wednesday into whether vehicle imports had damaged the American auto industry. That could lead to tariffs of up to 25 percent on the same \u201cnational security\u201d grounds used to impose U.S. steel and aluminum duties in March.<\/p>\n

U.S. Commerce Secretary Wilbur Ross said on Thursday the investigation was still in its early stages but that other countries\u2019 high, artificial barriers, such as tariffs and other interventions, have skewed the marketplace.<\/p>\n

\u201cNow it\u2019s very difficult to get back to a reciprocal arrangement,\u201d Ross said in an interview on CNBC, a day after announcing the probe, which could lead to new U.S. tariffs on imported vehicles.<\/p>\n

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The probe, launched under Section 232 of the Trade Expansion Act of 1962, will look at whether vehicle and parts imports are threatening the industry\u2019s health and ability to research and develop advanced technologies, Ross said on Wednesday.<\/p>\n

The U.S. Chamber of Commerce said it strongly opposes the move.<\/p>\n

\u201cIf this proposal is carried out, it would deal a staggering blow to the very industry it purports to protect and would threaten to ignite a global trade war,\u201d chamber President and Chief Executive Officer Thomas Donohue said in a statement. He urged the government to reverse course.<\/p>\n

Canadian Prime Minister Justin Trudeau said the U.S. move was based on flimsy logic and clearly linked to talks to modernize the North American Free Trade Agreement (NAFTA). NAFTA partner Canada is the largest exporter of auto products to the United States.<\/p>\n

Germany\u2019s DIHK Chambers of Industries and Commerce dismissed as far-fetched the national security justification for a probe. \u201cWe almost have to take this as a provocation,\u201d DIHK President Eric Schweitzer said.<\/p>\n

Together German carmakers BMW, Daimler AG\u00a0and Volkswagen AG control more than 90 percent of the North American premium auto market.<\/p>\n

Tariffs would hit Germany particularly hard and shave 0.16 percent off the economic output of Europe\u2019s largest economy, the influential Ifo think tank said. \u201cNo other country has higher absolute losses to fear than Germany,\u201d said Gabriel Felbermayr, foreign trade expert at Ifo.<\/p>\n

German Finance Minister Olaf Scholz said the European Union should be united in its response to the threat of U.S. tariffs.<\/p>\n

The probe comes ahead of midterm elections in the United States in November that will determine whether Republican President Donald Trump\u2019s party retains control of Congress. It is seen as part of Trump\u2019s \u201cAmerica First\u201d promise to win back manufacturing jobs lost to overseas competitors.<\/p>\n

United Auto Workers President Dennis Williams said he supports Trump\u2019s trade policies and his efforts to protect American workers from competition from low-wage countries.<\/p>\n

But that did not mean the UAW was ready to support Republicans running for Congress in the midterms. \u201cThe Republican Congress and Senate, they have totally ignored the needs of working men and women in this country,\u201d Williams said.<\/p>\n

U.S. Senate Finance Committee Chairman Orrin Hatch said possible auto tariffs are \u201cdeeply misguided,\u201d and urged the administration \u201cto remain focused on addressing China\u2019s trade practices.\u201d<\/p>\n

Pointing to a mixed bag of effects on U.S. producers after the metals tariffs, analysts were cautious about predicting major gains for U.S. companies and workers from the process.<\/p>\n

\u201cMeasures like this are ultimately about protecting American manufacturing jobs in states that voted for Trump rather than national security,\u201d Morningstar analyst David Whiston said in a note.<\/p>\n

\u201cWe don\u2019t see these tariffs (if proposed) lasting forever and we think (they) will ultimately cost American jobs.\u201d<\/p>\n

Shares of General Motors Co\u00a0rose 1.5 percent and Ford Motor Co\u00a0was up 1.7 percent in early afternoon trading.<\/p>\n

In Europe, BMW\u00a0and Daimler\u00a0shares dropped as much as 3.5 percent during the session, while Volkswagen AG closed down 2.5 percent. Together the three automakers control more than 90 percent of the North American premium auto market.<\/p>\n

Renault SA, exposed to the U.S. market via its 43.4 percent stake in Nissan, fell as much as 2.1 percent. Europe\u2019s auto sector index. SXAP lost 2 percent and was on track for its worst day in 10 months.<\/p>\n

Higher tariffs could be particularly painful for Asian automakers, including Toyota Motor Corp, Nissan Motor Co, Honda Motor Co\u00a0and Hyundai Motor Co, which count the United States as a key market. The probe sparked a broad sell-off in automakers\u2019 shares across the region.<\/p>\n

Toyota dropped 3 percent and Honda slid 3.4 percent.<\/p>\n

Toyota, which has 10 U.S. plants and 1,500 U.S. dealers, said in a statement that any tariffs \u201ccould hurt American jobs\u201d and raise costs for consumers.<\/p>\n

The governments of Japan, China and South Korea said they will monitor the situation, while Beijing, which is increasingly eyeing the United States as a potential market for its cars, added that it would defend its interests.<\/p>\n

In addition to tariffs, Commerce Secretary Ross cited other non-tariff barriers such as standards, licensing and \u201call kinds of other games.\u201d<\/p>\n

\u201cThe stupidity is that we let ourselves get into this box of extremely low rates,\u201d he told CNBC.<\/p>\n

The United States imported 8.3 million vehicles in 2017 worth $192 billion, including 2.4 million from Mexico, 1.8 million from Canada, 1.7 million from Japan, 930,000 from South Korea and 500,000 from Germany, according to U.S. government statistics.<\/p>\n

At the same time, the United States exported nearly 2 million vehicles worldwide worth $57 billion.<\/p>\n

(This refiled version restores dropped word \u201cof\u201d in first paragraph)<\/p>\n