July 2 (UPI) -- The European Union has warned it might impose up to $300 billion worth of tariffs on the United States if President Donald Trump follows through on a threat of new fiscal penalties on European vehicles.
The letter said U.S. tariffs on vehicles "could result in yet another disregard of international law" and "further damage the reputation" of the United States.
EU officials said no decision to retaliate has yet been made, but warned such countermeasures could impact "a significant volume of trade" amounting to $294 billion "across sectors of the U.S. economy." That figure would account for 19 percent of U.S. goods sold in the EU in 2017.
The EU has said the U.S. investigation into whether foreign cars and parts pose a national security risk could start an international trade war. Employment in the U.S. auto sector, which accounts for over four million jobs, could be particularly harmed.
The EU letter suggested new tariffs could trigger a loss of $14 billion to the U.S. economy.
Sunday, Trump said the United States' trade relationship with the 28-nation bloc is "possibly as bad as China."
"It is terrible what they do to us," Trump said in a television interview Sunday, citing trade deficits and "the car situation."
Trump's comments came after he threatened 20 percent tariffs on European cars imported to the United States in response to the EU's 25-percent tariff on $3 billion in U.S. goods. The EU action followed U.S. tariffs on steel and aluminum that took effect June 1.