US President Donald Trump threatened to impose a 20 per cent tariff on all European Union-assembled cars coming into the United States, a month after the administration launched an investigation into whether auto imports pose a national security threat.

"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 US Build them here!" Trump wrote on Twitter Friday.

Autos stocks fell on the news. The European Autos Stocks Index fell sharply after Trump’s 20 per cent tariff tweet and was last down 1.25 per cent. Ford Motor Co shares went into the red and were down 0.5 per cent, while General Motors Co shares were off 0.3 per cent.

The US Commerce Department is investigating whether imports of automobiles and auto parts pose a risk to national security. The deadline for completing the investigation is February, 2019, but Commerce Secretary Wilbur Ross said Thursday said the department aims to wrap up the probe much earlier, by late July or August.

The Commerce Department plans to hold two days of public comments in July on its probe of auto imports.

Trump has repeatedly singled out German auto imports to the United States for criticism.

At a meeting with automakers at the White House on May 11, Trump told automakers he was planning to impose tariffs of 20 or 25 per cent on some imported vehicles and sharply criticised Germany's automotive trade surplus with the United States.

The United States currently imposes a 2.5 per cent tariff on imported passenger cars from the European Union and a 25 per cent tariff on imported pickup trucks. The EU imposes a 10 per cent tariff on imported US cars.

The tariff proposal has drawn sharp condemnation from Republican lawmakers and business groups. A group representing major US and foreign automakers has said it was “confident that vehicle imports do not pose a national security risk”.

The US Chamber of Commerce noted that American auto production has doubled over the past decade, and said tariffs “would deal a staggering blow to the very industry it purports to protect and would threaten to ignite a global trade war.”

German automakers Volkswagen AG, Daimler AG and BMW AG build vehicles at plants in the United States. BMW is one of South Carolina's largest employers, with more than 9,000 workers in the state.

The United States in 2017 accounted for about 15 per cent of worldwide Mercedes-Benz and BMW brand sales. It accounts for 5 per cent of VW brand sales and 12 per cent of Audi sales.

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