LEVI clothing and bourbon could be hit with a 25 per cent import tax by the European Union if President Donald Trump imposes tariffs on European steel and aluminium.

Cecilia Malmström, EU Commissioner for Trade, said the items were on a draft list of US goods to be taxed.

Last week, the president said he would tax imported steel, declaring: “trade wars are good”.

The Trump administration says the tariffs are necessary to preserve the American industries and that doing so is a national security imperative.

His comments have prompted reaction around the world, with Prime Minister Theresa May voicing her concern in a phone call to Trump on Sunday.

Malmström said: “We are looking at possibilities to retaliate, meaning we will also put taxes or tariffs on US imports to the European Union.”

She said they would wait for the final decision, but added that “we are of course preparing. This has been in the air for some time”. She said that if the US went ahead and applied taxes to European steel, the EU would take the issue to the World Trade Organization (WTO).

Malmström stressed that Europe was looking to respond “to retaliate but not escalate”. But any action by Europe is likely to provoke further action by the US.

Meanwhile, Trump has said North American neighbours Canada and Mexico will get no relief from his new tariffs on steel and aluminium imports unless a “new and fair” free trade agreement is signed.

Trump’s latest tweets suggest he is also using the upcoming tariffs as leverage in ongoing talks to revise the North American Free Trade Agreement. The latest round of a nearly year-long renegotiation effort is concluding this week in Mexico City.

The tariffs will be made official in the next two weeks, White House officials said, as the administration defended the protectionist decision from critics in Washington and overseas.

Speaking yesterday, White House trade adviser Peter Navarro said: “Twenty-five per cent on steel, and the 10 per cent on aluminium, no country exclusions, firm line in the sand.”