AsianFin -- Shares of major German automakers and suppliers fell in pre-market trading on Thursday after U.S. President Donald Trump announced a 25% tariff on imported vehicles. The move poses a significant challenge to Germany’s already struggling auto industry.

According to pre-market data from Lang & Schwarz, BMW shares dropped 2.3%, Daimler Truck fell 1.9%, and auto parts supplier Continental saw a 3.9% decline. The tariffs could further pressure German car manufacturers, who rely heavily on exports to the U.S. market.

Germany’s VDA car lobby strongly criticized the newly announced tariffs, calling them a “fatal signal” for free and rules-based trade. The organization warned that the levies would not only hurt businesses but also disrupt global supply chains.

“The German automotive industry is urging immediate negotiations between the U.S. and the EU to reach a bilateral agreement,” VDA President Hildegard Müller said in a statement.

However, research from the IfW economic institute suggests that Germany will not be the hardest-hit country, according to a report by FAZ newspaper.

The institute estimates that Germany’s real GDP will shrink by 0.18% in the first year after the tariffs take effect, compared to a sharper decline of 1.81% in Mexico and 0.6% in Canada.