The US President has proposed a 25 percent duty on steel and 10 percent on aluminium imports risking a trade war with Brussels in a move designed to hit China.

The White House said the measures will protect industries and jobs from unfair competition and that across-the- board tariffs are needed because countries like China use third countries for shipping steel to the US, disguising its origin.

Fiat Chrysler CEO Sergio Marchionne warned the EU must handle the situation carefully.

Mr Marchionne said the US President obviously feels it would be “wrong” for the US to continue with the current trade deal and that he should be “taken seriously on that issue.”

He told CNBC: “I think we should be very careful that unbalanced free trade is not the answer to all things.

“It needs to be balanced and we need to be very careful. When President Trump is raising these issues he is raising issues he thinks is a perceived wrong on the US, lets take him seriously.

“I’m suggesting that we stop playing tit-for-tat, that we get our blood pressure to go back down to normal and that we sit down at the table and find a way to resolve this issue.”

“I don’t think we have to escalate this into a full-blown trade war.”

The EU has reacted with fury to the tariffs after Mr Trump vowed “to build our steel industry back and our aluminum industry back.”

European Commission President Jean-Claude Juncker said in a statement: “We strongly regret this step, which appears to represent a blatant intervention to protect U.S. domestic industry and not to be based on any national security justification,”

“We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk … The EU will react firmly and commensurately to defend our interests.”

EU trade chiefs are thought to be considering whether or not to impose a 25 percent tax on around $35.5billion of US imports.

Mr Trump hit back “If the EU wants to further increase their already massive tariffs and barriers on US companies doing business there, we will simply apply a tax on their cars which freely pour into the US.”