Donald Trump threatens new trade war with Europe

The US president isn't quite done with trade wars yet. Photo / File

Donald Trump and the World Trade Organisation's boss promised to radically reshape the under-fire trade mediator as the US president threatened to slap huge tariffs on EU carmakers.

Mr Trump warned that European Union cars will face a 25 per cent tariff if the US and Brussels do not reach a trade deal, after meeting with European Commission president Ursula von der Leyen at the World Economic Forum in Davos.

The president said the EU was a more difficult partner than China as he turns his sights to Brussels after reaching a deal with Beijing. Mr Trump warned the EU has "no choice" but to strike a deal, adding he has "a date in my mind" to impose auto tariffs.

He made the comments in a joint press conference with WTO director general Roberto Azevêdo, who will fly out to Washington in the coming weeks to discuss making sweeping changes to the organisation, Mr Trump revealed.

Mr Azevêdo admitted the WTO "has to change" and be "reformed" amid mounting pressure for tougher rules on 'developing' countries such as China.

The WTO had been "very unfair" to the US and was used by China as a "vehicle" for its explosive growth, Mr Trump said just before leaving Davos.

"We are talking about a whole new structure for the deal, or we will have to do something," he said. "We are going to do something that will be very dramatic. He [Azevêdo] will be coming with a lot of his representatives to Washington sometime next week or the week after and we will start working on it."

The WTO has been criticised for its inability to stop countries using state aid and underhand tactics, such as steel dumping, to gain an advantage over rivals in the international trade system.

Some developing countries are given more leeway though so-called special rights.

The US, EU and Japan issued a joint statement on Tuesday calling for the WTO to enact more strict rules to stop Chinese companies benefiting from state support.

- Telegraph