It comes after the EU imposed tariffs on a range of US goods in response to the US steel and aluminum tariffs
Donald Trump has threatened to place a 20% tariff on all car imports from the EU into the US.
It comes after the EU's new tariff on a range of US goods has came into force - a move which was itself a response to the Trump administration's recent steel and aluminum tariffs.
The EU's 25% tariff has been placed on €2.8bn worth of US goods, including Harley Davidson motorbikes, Levi jeans, bourbon whiskey and orange juice.
Peanut butter, tobacco and various metal products are among the other goods impacted.
In the latest warning of a potential trade war, this afternoon President Trump called on the EU to 'break down and remove' the new tariffs or face additional import taxes on European cars.
Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!— Donald J. Trump (@realDonaldTrump) June 22, 2018
Speaking about the newly imposed duties, EU policy chief Federica Mogherini has said the bloc was left with no choice but to act in response to Trump's metal tariffs.
She observed: "Clearly the European Union has to protect its interests."
European Commission President Jean-Claude Juncker said that the US steel and aluminum tariffs go against "all logic and history", saying the EU's response had to be "clear but measured".
The European Union Ambassador to the United States, Dan O'Sullivan, this afternoon suggested: "The EU-US economic relationship is the most important in the world bar none. A trade spat with the US is not where the EU wants to be.
"[It's] vital we address common challenges in interest of business, jobs & consumers on both sides of Atlantic."
As well as the EU, the US has imposed tariffs on goods from countries such as China, Canada and Mexico - with China among those to have swiftly responded with retaliatory tariffs.