US President Donald Trump has relaunched a major trade offensive against Europe, threatening to hit the EU with damaging auto tariffs if Europeans failed to agree a long-delayed trade deal.
"The European Union is tougher to deal with than anybody. They've taken advantage of our country for many years," Mr Trump told Fox Business News on the sidelines of the World Economic Forum in Davos.
"Ultimately, it will be very easy because if we can't make a deal, we'll have to put 25% tariffs on their cars," he added.
Mr Trump added that his attention would now to turn to Europe, after he sealed a trade truce with China after several years of a trade war that destabilised the world economy.
"I wanted to wait till I finished China, to be honest with you. I always like to be very transparent. I wanted to wait till I finished China. I didn't want to go with China and Europe at the same time."
Mr Trump's comments came a day after he said he held positive meeting with new EU Commission President Ursula von der Leyen on working towards reaching a US-EU trade pact.
A French diplomatic source said over the weekend that French President Emmanauel Macron and Mr Trump agreed in telephone talks to give negotiations a chance to avoid "a trade war that will benefit no one".
Washington had also moved this month to ease tensions on other trade fronts.
The US Senate this month voted to approve a new trade agreement linking the United States, Canada and Mexico. The United States and China also signed a long-awaited, if partial, deal to ease trade frictions.
I spoke to Bob Moritz, chairman of @pwc, in #Davos2020 #wef2020 this week about the results of the firm's latest survey of CEOs around the world, which found they are experiencing record levels of pessimism about economic growth - here's why.. pic.twitter.com/PSkdH59xUs— Will Goodbody (@willgoodbody) January 22, 2020
Separately, US Treasury Secretary Steven Mnuchin and his British counterpart Sajid Javid clashed over taxation in a brewing battle over how Europe taxes the world's biggest technology firms.
Mr Javid said Britain would press ahead with a digital service tax in April even as Mr Mnuchin, sitting close by him feet away on the same stage at the WEF, said such a move could generate "arbitrary" retaliation.
Several European nations are considering taxes on search engines, social media platforms and online marketplaces to compensate for lost revenues, drawing the ire of the US which claims that such a tax unfairly targets US firms.
"International tax issues are very complicated and take along time to look at. If people want to just arbitrarily put taxes on our digital companies, we'll consider arbitrarily putting taxes on car companies," Mr Mnuchin told the WEF panel.
France, which considered a similar tax, agreed this week to suspend down payments for this year's digital tax after Washington threatened retaliation with tariffs on French wine.
Mr Javid said Britain would not back down.
"We plan to go ahead with our digital services tax in April," Mr Javid said. "It's a proportionate tax and it's deliberately designed as a temporary tax, so it will fall away once there is an international solution."
Seemingly trying to ease the tension, Mr Mnuchin added that talks over the issue would be done in private, not on live television, and the key discussion is likely to be between President Trump and British Prime Minister Boris Johnson.
Mr Mnuchin also said that the US was ready to strike a new trade agreement with Britain after it leaves the European Union.
"We’re very much looking forward to a new trade agreement with the UK. That’s a big priority of ours for this year".
He jokingly added the he was disappointed that Britain would not do a deal with the US ahead of the EU given that it would be an easier negotiating partner.