US President Donald Trump has threatened to slap 20% tariffs on cars imported from the EU as trade tensions with the EU threaten to escalate into a 'tit-for-tat' trade war.

In a tweet he said such a move would be in response to EU tariffs imposed on a range of US products today (which is also a retaliatory move).

"Based on the Tariffs and Trade Barriers long placed on the U.S. 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% Tariff on all of their cars coming into the U.S." he wrote on Twitter, adding: "Build them here!"

The Trump administration has initiated a US trade department investigation into vehicle imports which could result in tariffs being added on cars on 'national security' grounds - also the justification used for import tariffs on aluminium and steel from a range of countries, including the EU.

Trump has made remarks before drawing attention to the imbalance on automotive trade between the US and Germany. German companies point to their sizeable manufacturing investments in the US and BMW has repeatedly pointed out that it is the largest vehicle exporter - by value - from the US.

Daimler warned this week that the prospect of higher tariffs - on US-made cars it ships to China - will likely dent profits this year.

Trump targets German automakers - report

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