The recent souring of diplomatic relations between the US and Germany over policy towards Iraq has led to a number of media reports speculating that a US boycott of German products could gather momentum and that the enraged Bush administration may even slap higher import taxes on German products, including cars.

Reuters reports that analysts are saying that German carmakers stand to be potentially especially hard hit by any boycott of German products in the US.

“If the boycott against German products in the US is further inflamed by politics, the carmakers could suffer,” said Michael Punzet, analyst at Landesbank Rheinland-Pfalz, in remarks reported by Reuters.

“We are treading on very dangerous terrain, with Schroeder not even willing to give the US a little finger. He could have offered humanitarian help,” said Ulf Moritzen, fund manager at Nordinvest in Hamburg, in remarks reported by Reuters.

There are also growing fears that the effects of the diplomatic wrangling could further harm Germany’s fragile economy.

“On top of the war, we have all these other economic problems and the social system going down the drain. I think Schroeder is risking a premium he doesn’t have,” Nordinvest’s Moritzen told Reuters.

In 2002, Volkswagen Group sold some 424,000 vehicles in the US and BMW Group sales were 256,600 units. Mercedes-Benz sold some 213,000 units in the period.