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The tool, which was drawn up during Trump’s first term and subsequently used as a deterrent against China, allows the EU’s executive arm to impose restrictions on trade in services if it determines that a country is using tariffs on goods to force changes in policy.

The European Union wants to engage swiftly with the United States over President Donald Trump's planned tariffs, trade chief Maros Sefcovic said on Tuesday, while his boss Ursula von der Leyen forecast negotiations with Washington would be tough.

Donald Trump is considering plans to impose a 10 per cent tariff on the EU, The Telegraph understands. The move would pour fuel on a blooming global trade war, which began at the weekend when the US president slapped sweeping levies on goods imported from Mexico, Canada and China.

The European Union is preparing for a transatlantic trade fight, but US President Donald Trump’s decision to delay broad tariffs on Mexico and Canada this week has bolstered confidence in the bloc that it will be able to negotiate an acceptable outcome.

U.S. President Donald Trump has hinted that the European Union could be the next target in his ongoing tariff battle. After imposing steep tariffs on China, Mexico, and Canada, Trump now claims the EU has been unfairly benefiting at the expense of the U.