German automaker stocks fell sharply in late trading Friday after President Donald Trump threatened to apply a 20% tariff on all cars coming into the United States from the European Union. 

Trump Tweeted that if Europe's tariffs aren't removed, he would apply the added levy to auto imports, although he did not specify how and when the charge may be put in place. His comments come on the same day that the EU imposed its own retaliatory tariffs on $3.4 billion worth of U.S. goods in response to the Trump administration's charge in non-American steel and aluminium.

European car maker stocks were marked sharply lower following the Tweet, reverse earlier session gains, with the Stoxx 600 Automobiles and Parts index falling 1% to 570 points, the lowest level in nine months. Shares in Daimler AG (DMLRY)  extended their recent decline, falling 1.1% to €57.09 each to trade near two-year. The luxury carmaker issued a surprise profit warning late Wednesday, citing trade tensions and the ongoing diesel emissions scandal.

The euro was also hit, falling 0.36% from a session high to trade at 1.1632 following the President's comments.

Daimler said fewer-than-expected Mercedes SUV sales, as well as higher costs that can't be passed on to customers, need to be factored in to its new 2018 earnings projections "because of increased import tariffs for US vehicles into the Chinese market." Daimler now sees full-year group earnings that are "slightly below" 2017 levels and full-year Mercedes-Benz Vans earnings that are "significantly" lower.

Domestic rival BMW AG shares (BMWYY) were also under pressure, falling 2.14% to €74.90 each, the lowest since September 2017. Volkswagen AG (VLKAY) shares were marked 0.77% lower at €147.75 each 

President Donald Trump has consistently referenced the European auto sector as a potential target for tariffs in his effort to reduce what he has called "unfair" trade agreements between the United States and its largest economic partners.

The average EU tariff on U.S. goods imported into the bloc is 3%, according to Export.gov data, although non-EU automobiles are subject to a 29% tariff when brought into the bloc, of which 19% is a value-added tax and 10% is a tariff based on current World Trade Organization (WTO) rules.

Cars imported into the United States from countries that don't have existing pacts with Washington are subject to a 12.5% levy, while pickup trucks are subject to a 25% tariff.

That said, some of the largest production facilities of Europe's biggest carmarkers are located in the United States, with plants in Vance, Al. and Spartanburg, S.C. and Chattanooga, Tn., that assemble around a third of the German cars sold domestically.