Trump threatens European vehicle manufacturers with tax on imports

WASHINGTON US President Donald Trump kept up pressure on trading partners, threatening European vehicle manufacturers with a tax on imports if the European Union retaliates against his plan to slap tariffs on aluminium and steel.

"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," Mr Trump wrote on Twitter.

"They make it impossible for our cars (and more) to sell there. Big trade imbalance!"

Mr Trump's tweet suggested he is refusing to yield to US business interests and foreign trading partners alarmed at the prospect of a trade war that rattled financial markets.

The US imposes a 2.5 per cent tariff on cars assembled in Europe and a 25 per cent tariff on European-built vans and pickup trucks.

Europe imposes a 10 per cent tariff on US-built cars.

Mr Trump criticised Europe in remarks at a fund-raiser, according to video posted online on Saturday, and suggested they would not increase tariffs.

"The European Union: brutal. They've been brutal to us," Mr Trump said at a Florida fund-raiser. "They've banded together in order to beat the US in trade."

Meanwhile, US Commerce Secretary Wilbur Ross said yesterday that Mr Trump has spoken to world leaders about his planned tariff hikes on steel and aluminum and is not considering any exemptions to the measure.

"The decision obviously is his, but as of the moment as far as I know he's talking about a fairly broad brush," Mr Ross told ABC News.