Trump threatens EU auto industry over bloc's trade war retaliation

At Frankfurt's IAA auto show, European carmakers are looking east for growth. AFP/DANIEL ROLAND

"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 tweeted.

"They make it impossible for our cars (and more) to sell there," he added, slamming what he called a "big trade imbalance."

Earlier, he had blamed the US's "very stupid" trade deals for, according to him, an US$800 billion annual trade deficit.

On Friday, European Commission chief Jean-Claude Juncker said the EU was drawing up measures against leading US brands such as Levi's and Harley-Davidson, after Trump sparked global uproar by announcing plans for tariffs on steel and aluminum, then describing trade wars as "good, and easy to win."

"We will not sit idly when European industry and jobs are threatened," Juncker said on the sidelines of a conference in Hamburg, Germany.

The EU's response matches similar moves during a 2003 "steel war" unleashed by George W Bush's administration - which prompted he US to back down before the EU carried out its threat.

An advocate of Made in America, Trump has been a harsh critic of his predecessors' trade agreements, which he says have taken millions of jobs away from the US.

He has been particularly vocal in criticizing the North American Free Trade Agreement (NAFTA), which the US, Canada and Mexico are currently renegotiating. One aspect of the pact is that any vehicle at least 65 per cent assembled in one of the three countries can be sold without import tax.

Trump has already repeatedly accused the EU of impeding US imports and threatened customs taxes on European manufacturers, particularly Germany and its high-end brands.

But German vehicles represent only a small part - 7.9 per cent - of the US automobile market, according to the German auto industry association (VDA), with German manufacturers producing 803,000 vehicles in the US itself in 2017.

Most foreign auto manufacturers selling vehicles in America have some form of production operations in the US.