The EU has threatened the U.S. with countermeasures worth $294 billion if the Trump administration imposes further tariffs on European cars as a result of the ongoing investigation into whether they pose a possible threat to national security.
The EU has targeted $3.2 billion United States in American goods exported to the 28-member bloc, including bourbon and Harley Davidson motorcycles.
In May, his administration had initiated an inquiry to ascertain if the automobile imports were a national security threat.
Trump's threat was the latest salvo in an escalating trade war that saw the EU slap duties on US-made jeans and Harley Davidson motorcycles in a tit-for-tat response to USA tariffs on European steel and aluminium exports.
Texas sends $321m in meat exports to Mexico each year that could be affected.
"New tariffs on steel, aluminum, and Chinese imports, as well as the potential for additional tariffs on autos and auto parts, have pushed us to the brink of a global trade war", the U.S. Chamber of Commerce, the largest business group in the country, said in a new study.
Trump has attacked the legendary Harley-Davidson motorcycle company, warning "we won't forget" after the firm said it planned to shift some manufacturing offshore due to European Union tariffs.
The group representing major foreign automakers, including Toyota, Volkswagen, BMW and Hyundai, the Association of Global Automakers said the tariffs would harm automakers and USA consumers.
What's more, the USA tariffs on imported Chinese products could end up hurting American manufacturers.
For example, almost $4 billion worth of exports from Texas could be targeted by retaliatory tariffs, the Chamber said, including $321 million in meat the state sends to Mexico each year and $494 million in grain sorghum it exports to China.
Mr. Trump's secretary of commerce, Wilbur Ross, has hinted the decision on automotive tariffs could come as early as this month.
On July 6, the U.S.is due to impose to impose tariffs on $34 billion worth of goods from China.
"The president is committed to making sure we have good deals", she said.
The ISM said that demand remained strong but supply chains continued to "struggle" because of import tariffs and the robust economy.
The European Union (EU) has warned the United States that imposing import tariffs on cars and vehicle parts would harm its own automotive industry and likely lead to counter-measures by its trading partners on $294 billion of U.S. exports.
The document also said that European auto makers in the United States make about 2.9 million cars per year, accounting for 120,000 jobs directly involved in the manufacturing process, or 420,000 jobs if non-direct roles such as vehicle parts production and retailers are included.