US President Donald Trump’s plans to impose tariffs will mean higher car prices for US consumers and hurt global carmakers, Germany’s auto industry powerhouse warned today, with shares in the carmaker falling on the prospect of higher US tariffs on imports.

Hildegard Müller, president of the German auto association VDA, told an annual press conference that Trump’s threatened tariffs will lead to an increase in inflation in the US.

“Donald Trump promised in his election campaign to reduce inflation,” he said. “In that sense, we look forward to further discussions on this matter.”

Trump, who took office yesterday, did not immediately implement a series of tariffs he had announced but said they remained an option and hinted that 25 percent tariffs on Canada and Mexico could be imposed as early as February 1.

In the past, Trump has used the threat of tariffs to pressure automakers to move more of their production to the US.

Global automakers build cars in Mexico to sell in the US and the Central American country is an integral part of the supply chain for American vehicle production.

Major suppliers such as Bosch and Continental are working out ways to shift some production and soften the impact, but U.S. tariffs on auto imports from Mexico could also hit automakers and their suppliers in the U.S., Europe , Japan and South Korea.

In Asia, the continued threat of US tariffs hit shares of Honda, Mazda, Hyundai and Kia, all of which make vehicles in Mexico.

In Europe, shares of Volkswagen and Stellantis, which may be particularly vulnerable to production tariffs in Mexico, recorded down 0.8% and 1.3% respectively.

Volkswagen, the world’s second-largest automaker, said it was “concerned about the harmful economic impact the US government’s proposed tariffs will have on American consumers and the international auto industry.”

Automakers have begun negotiations with Trump’s team ahead of the new president’s inauguration in hopes of averting tariffs.

Stellantis President John Elkann spent four days in Washington meeting with Trump and senior officials, according to a company source.

Elkann, who is currently at the helm of Chrysler and Jeep parent Stellantis while the search for a new chief executive is underway, was among the global executives who attended Trump’s inauguration celebrations yesterday.

OR Volkswagen is also in close contact with the Trump administration on tariffs, two people with knowledge of the matter said.

Volkswagen and its German rivals Mercedes-Benz and BMW have plants in Republican states that voted for Trump and have all emphasized their commitment to American manufacturing.

The VDA’s Miller said this “should be taken into account” in any tariff talks. “We have a lot to offer, a lot of jobs in the U.S., a functioning manufacturing network that also creates growth and prosperity in the U.S.,” he said. “If tariffs are imposed, we need to look at how we can respond to them in a tangible way.”