Germany 'could sue US' over border tax

Germany could take legal action against US President Donald Trump over a proposed border tax, Economy Minister Brigitte Zypries says.

Trump has warned that the US will impose a border tax of 35 per cent on cars that German carmaker BMW plans to build at a new plant in Mexico and export to the US market.

Asked on Deutschlandfunk radio how Germany would react to the proposed tax, Zypries said it would possible although difficult to adjust to such a tax system.

"The other option is that we file a suit against him at the WTO - there are procedures laid out there because in the WTO agreements it is clearly laid out that you're not allowed to take more than 2.5 per cent taxes on imports of cars," Zypries said.