By Sarah Marsh and Matthias Williams

BERLIN (Reuters) -German Chancellor Friedrich Merz on Thursday said Europe was prepared to fight if necessary for its core values of freedom and democracy, in an explicit riposte to the Trump administration's repeated criticisms of the European Union.

Speaking at a ceremony to award European Commission President Ursula von der Leyen the Charlemagne Prize, Merz also repeated that Europe did not want an escalation in its tariff dispute with the United States that harmed both sides.

He recalled a speech by U.S. Vice President JD Vance in Munich in February, in which Vance made a blistering attack on Europe, saying it faced a "threat from within" and that free speech was "in retreat".

Merz's remarks come a day after the U.S. said it would impose visa bans on foreign nationals it deems to be censoring Americans, which could include officials regulating U.S. tech companies.

No specific targets were named, but U.S. tech companies and the Trump administration have challenged U.S. allies in Europe, alleging censorship of social media platforms.

"U.S. Vice President JD Vance confronted us with this question in his own way in Munich at the beginning of the year: What is it that we Europeans defend together? What is it that we stand for together?" Merz said.

"Ladies and gentlemen, we don't have just any answer to that. We have the strongest and best answer imaginable," he said.

"It is: We in Europe stand for what we – over centuries, through countless setbacks and catastrophes – what we have conceived, developed, achieved, and fought for together: namely, the conviction that freedom and democracy are worth standing up for resolutely and, if necessary, fighting to preserve them."

Merz, a conservative who took office this year vowing to make the German army the strongest conventional force in Europe, said Germany would not stand on the sidelines to strengthen Europe, and hailed "a new spirit of unity" among Europeans.

He cited support for Ukraine and a trade and defence reset with Britain earlier this month.

(Writing by Matthias WilliamsEditing by Ros Russell)