European industry has hit back at Donald Trump’s “ludicrous demands” to hand over Greenland or face a trade war.

A fresh round of tariffs on European exports would cost Germany and Europe dearly, the president of the German auto industry association has said, as he called for a “smart” response coordinated by Brussels.

“The costs of these additional tariffs would be enormous for German and European industry, especially in these already challenging times,” said Hildegard Müller, the president of the VDA trade organisation.

“What is crucial now is a smart, strategic response from Brussels that is coordinated with the countries affected,” she added.

Trump’s shock threat on Saturday to impose additional tariffs of 10% in February with a further 25% in June have derailed a period of relative transatlantic trade calm after the EU-US agreement struck at the US president’s Scottish golf course last July.

European leaders are expected to meet in Brussels on Thursday for an emergency summit to discuss the prospect of imposing counter-tariffs on US exports on 7 February that would hit everything from liquid gas to aircraft and machinery.

The German engineering trade group, whose members include vital tool machine exporters, urged the EU to face Trump down. “If the EU gives in here, it will only encourage the US president to make the next ludicrous demand and threaten further tariffs,” said Bertram Kawlath, the president of the German engineering association VDMA.

The German Chamber of Commerce and Industry (DIHK) said it was wrong of Trump to link the economies to political ambitions. “Highly controversial political goals are being tied to economic sanctions in an unacceptable manner,” said Volker Treier, a member of the DIHK executive board.

On Monday the EU struck a diplomatic note, calling for calm on all sides as leaders tried to work among themselves and with the White House to avert the crisis over Greenland spiralling into a full-on trade war in two weeks’ time.

Manufacturers have been scrambling to work out whether try to get more products into the US before the tariffs, as they were forced to do in April last year when Trump announced his “liberation day” levies. However, one senior figure in the UK automotive industry said the short deadline meant there was limited time to rush cars into the US before the levies.

An executive at a large carmaker that exports to the US said they were “reaching for the same golf bag and pulling out the same clubs again”, although they were still in “wait and see” mode given the lack of formal direction on how tariffs will be implemented – or whether they are a merely an opening negotiating tactic.

The carmaker is considering how it can “play for time” in the hope that talks between governments will avert the threat, the person said. “We did not see that one coming,” they added.

Stephen Davies, the chief executive of the Welsh whisky maker Penderyn, which exports to 20 states in the US, said the tariffs would add more costs than could be absorbed. “It’s just not going to work,” he said.

He added: “People will disappear from the market and just hold fire until conditions get better. But you’ve been working for years building reputation and building product knowledge with consumers and you don’t want to stop doing that.”

Paul Nowak, the general secretary of the Trades Union Congress, said Trump’s tariffs “threaten to take a wrecking ball to key British manufacturing sectors and jobs”. “That’s why [the British] government must continue to prioritise a closer trading relationship with the EU. It’s common sense in an increasingly volatile and unpredictable global economy that we forge stronger ties with our closest neighbours and largest trading partner.”

A senior steel executive said the UK industry had reached an “equilibrium” on US trade, with customers accepting the previous 25% tariffs. The prospect of another 10% will force exporters to restart negotiations over who bears the costs – with either the US importer paying the tariff, or the exporter forced to cut prices.

It was too late to try to rush products over the Atlantic before 1 February, with lead times and shipping times measured in weeks, said another steel industry source. “There will be a lot of instability with the customers,” the person said.