German automotive stocks fell after President Donald Trump threatened to impose a 20 percent tariff on all European car imports, escalating his demand for concessions aimed at lowering the U.S. trade deficit.

Shares of Volkswagen AG, Daimler AG and BMW AG fell in Frankfurt after Trump’s latest broadside, insisting European manufacturers “build them here!” General Motors Co. and other U.S. automakers pared earlier gains, on concern they too would get caught up in rising global tariffs.

“Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!” Trump said in a tweet today.

Today’s salvo marks a further intensification of Trump’s campaign to tear up trade agreements and extract better terms. The U.S. forced a renegotiation of its Nafta deal with Mexico and Canada, while exchanging tariff threats with China. German manufacturers, which import 600,000 vehicles into the U.S. each year but are also major exporters, are a favorite target. The president has openly lamented the number of Mercedes-Benz logos he sees prowling Fifth Avenue and criticized Germany this week for snubbing American-made Fords.

The risk of a trade war is becoming more real, said Jeff Schuster, senior vice president of forecasting at LMC Automotive, before Trump’s latest salvo.

“A few weeks ago, we thought these issues on trade would fade away,” Schuster said. “What we’re now looking at is extremely disruptive to carmakers for their production setups and profit margins.”

Read here for more on the toll of Trump’s trade war on automakers

BMW and Daimler have had a quarter-century presence in the U.S. BMW started making cars in Spartanburg, South Carolina, in 1994. Its biggest plant globally, where it only makes sport utility vehicles, has made it the largestU.S. car exporter by value, shipping vehicles worth some $10 billion last year.

Daimler makes vehicles like the GLE SUV and C-Class sedans at its factory in Tuscaloosa, Alabama. The company last year said it would invest $1 billion to start making electric vehicles there. The plant sends enough cars to China that Daimler blamed a profit warning this week on China’s plan for retaliatory tariffs against the U.S.

Volkswagen makes models including Passat sedans and Atlas SUVs in Chattanooga, Tennessee, for the U.S. market while Volvo Cars could export to China from its new plant in Charleston, South Carolina.

NO PROFIT

Arndt Ellinghorst, a London-based analyst at Evercore ISI, estimates the German manufacturers would suffer a financial hit of about 4.5 billion euros ($5.24 billion) if Trump follows through on his threat.

A 20 percent tariff “would be a TERRIBLE (to use modern language) scenario for Germany which is shipping about 600,000 units to the U.S. per year,” Ellinghorst said in a note to clients. “Not a single car could be shipped with a profit to the U.S.,” he said.

While the damage would be steep, today’s proposal is actually lower than the 25 percent previously floated by Trump. A surcharge at the higher rate would add around 10,000 euros to the sticker price of a European built car, the European Commission said in a report obtained by Bloomberg News prepared ahead of next week’s summit assessing tariff threats. Duties at this level could be expected roughly to reduce U.S. imports of car and car parts in half.

Daimler, the maker of Mercedes-Benz cars, pared steeper earlier losses to close down 0.3 percent. Fellow luxury-car maker BMW declined 1.1 percent. Volkswagen, less reliant on imports into the U.S., slipped 0.2 percent.

General Motors, which had gained as much as 1.5 percent, was up 0.8 percent at midday in New York. Ford Motor Co. was up 0.1 percent, after an earlier 1.4 percent rise, and Fiat Chrysler Automobiles NV’s New York-trade gave back most of its earlier 2.5 percent advance.

COOLER HEADS?

German car-lobby group VDA called for continued talks with the U.S., saying any further escalation of trade conflict “is of no use to anyone.” For its part, the EU is worried that U.S. tariffs would cause “severe disruption” to the bloc’s auto industry, according to the paper.

A U.S. tariff on car imports “would call into question the global production model at a time when efforts should be devoted” to developing self-driving features and electric vehicles, the commission said in the paper. “It goes without saying that protectionist measures of this kind will not help U.S. car producers either.”

German manufacturers Volkswagen, BMW and Daimler are the biggest European exporters of cars to the U.S., followed by Fiat Chrysler.