US President Donald Trump has threatened the European Union with taxes on cars if the bloc increases tariffs on US companies.
"If the EU wants to further increase their already massive tariffs and barriers on US companies doing business there, we will simply apply a Tax on their Cars which freely pour into the US," Trump said on Twitter on Saturday. "They make it impossible for our cars (and more) to sell there. Big trade imbalance!"
Trump also complained about the trade deficit, attributing it to "our 'very stupid' trade deals and policies".
Echoing words he used during the 2016 election campaign, Trump said the trade deals give US jobs and wealth "to other countries that have taken advantage of us for years". They "laugh at what fools our leaders have been. No more!" he added.
Trump on Thursday announced plans to slap tariffs of 25 per cent on all imported steel and 10 per cent on broad categories of aluminium imports, prompting trade partners to consider retaliatory measures. Trump later boasted that trade wars are "good, and easy to win".
European Commission spokesman Alexander Winterstein said the EU has been preparing for the situation "for a long time". Winterstein said a decision could be taken when top commission officials meet on Wednesday.
He said the EU will also stand ready to protect Europe's embattled steel market in case of a surge of imports as a result of the US tariffs. The EU will further seek to settle the dispute before the World Trade Organisation, he added.
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