"When we want to negotiate tariffs, on cars for example, we need a common European position and we are still working on it," Merkel said.
U.S. President Donald Trump threatened last month to impose a 20-percent import tariff on all E.U.-assembled vehicles, which could upend the industry's current business model for selling cars in the United States.
According to an industry source, the U.S. ambassador to Germany told German car bosses from BMW, Daimler and Volkswagen at a meeting on Wednesday that Trump could abandon such threats if the E.U. scrapped duties on U.S. cars imported into the bloc.
Merkel said any move to cut tariffs on U.S. vehicles would require reductions on those imported from other countries to conform with World Trade Organization rules.
"I would be ready to support negotiations on reducing tariffs, but we would not be able to do this only with the U.S.," she said.
German automotive trade body VDA said any suggestions about mutually removing tariffs and other trade barriers were positive signals.
"But it is clear that the negotiations are exclusively being held at a political level," it said in a statement.
Current U.S. import tariff rates on cars are 2.5 percent and on trucks 25 percent. The E.U. has a 10 percent levy on car imports from the United States.
Trump hit the E.U., Canada and Mexico with tariffs of 25 percent on steel and 10 percent on aluminum at the start of June, ending exemptions that had been in place since March.
The E.U. executive responded by imposing its own import duties of 25 percent on a range of U.S. goods, including steel and aluminum products, farm produce such as sweetcorn and peanuts, bourbon, jeans and motor-bikes.
Trump's protectionist trade policies, which also target Chinese imports, have raised fears of a full-blown and protracted trade war that threatens to damage the world economy.
Reporting by Markus Wacket, Joseph Nasr, Thomas Escritt and Sabine Wollrab.