Retaliatory tariffs would cost billions and kill thousands of jobs.
Trump has criticized the European Union for having higher import taxes on cars and for its trade surplus with the United States, this includes a 10 percent tax on cars entering the EU compared with a 2.5 percent tax for cars entering the U.S. A report submitted by the European Commission to the US Department of Commerce on Friday suggests that protectionist measures would do severe damage to the US economy.
Just 45.9% of tariff lines are subject to no tax at the USA border. "A potential offset to the blackout of corporate buying is that individual investors have been net buyers of ETFs and mutual funds that invest in USA and worldwide stocks in five of the past six weeks despite the trade worries".
It also argued that tariffs on cars and vehicle parts could hurt economic growth in North America, with an estimated initial $US13-14 billion hit on United States gross domestic product. This weekend, Ottawa imposed tariffs on United States goods worth around $12.6 billion.
The US tycoon has also threatened to slap a 20 percent duty on European Union auto imports, based on highly disputed national security concerns, which could be confirmed in the coming months.
He has also stepped up attacks on the European Union via Twitter and at his public rallies.
US President Donald Trump boards Air Force One prior to departure from Morristown Municipal Airport in Morristown, New Jersey, July 1, 2018, following a weekend in Bedminster, New Jersey.
The letter also said any auto tariffs would "damage further the reputation" of the USA, according to the FT.
Mr. Trump's secretary of commerce, Wilbur Ross, has hinted the decision on automotive tariffs could come as early as this month.
The group's analysis of the harm each U.S. state could suffer from retaliation by USA trading partners painted a gloomy picture that could bring pressure on the White House from Republicans ahead of congressional elections in November.
"Despite Trump's bluster, trade wars should not be invited and are never easy to win", said Pascrell, a member of the House Ways and Means Committee, which oversees trade issues.
European Council President Donald Tusk, Chinese Premier Li Keqiang and EU Commission President Jean-Claude Juncker attend a signing ceremony during a EU-China Summit in Brussels, Belgium June 2, 2017.
But the 28-nation bloc seems resolute in its opposition to sanctions.
This comes after President Trump pointed out that the European Union is charging an unfairly high tax on American-made cars.
The commission also underlined that European auto companies were important contributors to the USA economy and "well established" there.