Donald Trump threatens EU with 20% tariffs on European cars in major escalation of trade war

Threat comes after EU retaliates to US steel and aluminium tariffs

Donald Trump has threatened to slap 20 per cent tariffs on European cars, in a move likely to escalate the nascent trade war between the US and its allies.

The American president issued the warning on Friday as the EU imposed tariffs on a spread of US goods ranging from Bourbon whiskey through motorcycles and playing cards.

The EU imposed the “rebalancing” charges in response to Mr Trump’s new policy of slapping 20 per cent tariffs on European steel and aluminium. The US president has said he believes the EU treats US goods “very unfairly”.

“Based on the tariffs and trade barriers long placed on the US and it great companies and workers by the European Union, if these tariffs and barriers are not soon broken down and removed, we will be placing a 20 per cent tariff on all of their cars coming into the US. Build them here!” he said in a statement posted on social media.

Ahead of imposing the €2.8 billion (£2.5bn) in charges on US goods on Friday, EU Trade commissioner Cecilia Malmström said the US could not expect to restrict trade from the EU without provoking a reaction.

“We did not want to be in this position. However, the unilateral and unjustified decision of the US to impose steel and aluminium tariffs on the EU means that we are left with no other choice,” she said.

 If these tariffs and barriers are not soon broken down and removed, we will be placing a 20 per cent tariff on all of their cars coming into the US. Build them here!

Donald Trump, US president

“The rules of international trade, which we have developed over the years hand in hand with our American partners, cannot be violated without a reaction from our side. Our response is measured, proportionate and fully in line with WTO rules. Needless to say, if the US removes its tariffs, our measures will also be removed.”

The bloc says it has another €3.6 billion in US products lined up for further tariffs if the WTO trade court, where it has lodged a dispute against the new steel tariffs, finds in its favour.

Mr Trump has also Canadian and and Mexican metal producers with tariffs of 25 per cent on steel and 10 per cent on aluminium at the start of June after a protracted battled over trade. The US president has said on the record that he believe trade wars are “good, and easy to win”.

US tariffs on European cars would likely harm EU automotive producers, raise prices on European cars for American consumers, and possibly raise demand for American, or at least non-European, cars.