Trump is talking tough on trade

Trump is talking tough on trade

After announcing plans for new US import tariffs on steel and aluminium, US President Donald Trump has also raised the prospect of new tariffs applied to car imports from the EU.

President Donald Trump escalated threats of a trade war on Saturday, saying he would slap a new tax on European cars if the EU retaliated against his proposed steel and aluminium tariffs.

EU officials said they would retaliate with new tariffs on US goods, including Harley-Davidson motorbikes, bourbon whiskey and Levi's jeans.

Trump said in a tweet that such a response from the EU would meet a 'Tax on their Cars which freely pour into the US' adding that 'they make it impossible for our cars (and more) to sell there.'

Trump also tweeted that 'very stupid'" trade deals are holding America back.

"The United States has an $800 Billion Dollar Yearly Trade Deficit because of our 'very stupid' trade deals and policies," he said. "Our jobs and wealth are being given to other countries that have taken advantage of us for years. They laugh at what fools our leaders have been. No more!"

Automakers in the US and Europe have supported a US-EU free trade deal, as it could help reduce costs and remove tariffs on trade between the two regions. The US imposes a 2.5% tariff on car imports from the EU and the EU has a 10% Common External Tariff (CET) rate applying to all new car imports into the EU customs union.

International trade war worries sent world stock markets down last week.