Donald Trump has escalated trade tensions with the European Union after announcing a steep increase in tariffs on European cars and trucks to 25%, up from the 15% rate agreed under a deal struck last year.
The new levies will not apply to vehicles manufactured in US facilities, and Trump said the move could push European automakers to relocate production to the United States more quickly.
The European Union quickly responded with a 'firm' warning, with Bernd Lange, who leads the European Parliament's international trade committee, strongly criticising the decision and signaling potential retaliation.
The dispute centers around a disagreement over compliance with the trade agreement reached in Scotland last July, with Trump accusing the EU of failing to implement its commitments and European officials arguing the US has repeatedly breached the deal.
The announcement rattled markets, with shares of major US automakers slipping in early trading, and raised concerns about a potential trade war between the US and EU.
