“The German government rejects the tariffs imposed by the US on steel and aluminium. We consider this unilateral measure to be illegal; the cited grounds of national security do not stand up,” Merkel's spokesman Steffen Seibert said in a statement.
“The measure risks touching off spirals of escalation that in the end hurt everyone.”
Merkel said the European Union had made the “necessary preparations for appropriate countermeasures” to the tariffs, after EU chief Jean-Claude Juncker announced steps to hit back “within hours”.
But Seibert stressed Berlin remained ready to talk to head off a trade war.
“The situation remains: the German government will continue to fight for free trade and open markets,” he said. “We will continue to take a multilateral approach.”
German Foreign Minister Heiko Maas pledged a united European front against protectionist measures.
“Our answer to 'America First' can only be 'Europe united',” he said in a statement. “Trade wars don't have any winners.”
Maas said Berlin “cannot understand and rejects” the US decision announced by Commerce Secretary Wilbur Ross to target the EU as well as Canada and Mexico from midnight.
“We have repeatedly made clear to the Americans that we have no interest in an escalation in trade relations between the EU and the US,” he said, expressing regret that feverish talks in recent weeks had proved fruitless.
Germany, the EU's top economy, is particularly vulnerable to the tariffs due to its heavy reliance on the auto industry.
The German Chambers of Commerce and Industry (DIHK), which has calculated that autos and car parts accounted for over a quarter of Germany's €111.5 billion in exports to the United States last year, said the US move “should almost be seen as a provocation”.
German carmakers exported nearly half a million vehicles to the US in 2017, but they also built over 800,000 cars at American factories where they employ some 36,500 people – and car parts producers around 80,000 more.
In the first statement from the German industry, luxury automaker BMW warned of a destructive impact from the tariffs.
“Barrier-free access to markets is therefore a key factor not only for our business model, but also for growth, welfare and employment throughout the global economy,” it said.