Donald Trump's tariff threat puts JLR and Aston Martin in the firing line

The US is a key market for both companies, accounting for one in five cars sold around the world by JLR, which makes its engines at the i54 site in Wolverhampton. A heavy tax would almost certainly hit their sales in America.

In the latest move in a growing tit-for-tat trade war, President Trump has threatened a 20 per cent tax on cars imported from the European Union.

It came after the EU imposed its own tariffs on £2.4 billion of American products including motorcycles, denim jeans and bourbon whisky, in response to Mr Trump's earlier tariffs on steel and aluminium from EU countries including Britain.

In a Tweet, the President said: "Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, 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 U.S. Build them here!"

The latest threat could have a serious impact on car markers; North America is one of Jaguar Land Rover's biggest markets, accounting for 20 per cent of its sales last year, and it is already struggling with a downturn in sales in the UK and Europe.

And Aston Martin has just unveiled ambitious plans for a test track and development centre at Silverstone and a new London office, in addition to its factory and headquarters at Gaydon in Warwickshire and the new factory it is building in Wales. Growing sales in America helped it achieve record figures last year, but a 20 per cent import tax could punch a hole in future profits.

Mr Trump's threat had an immediate impact on the share price of leading European car makers, with Volkswagen down one per cent, Daimler fell 1.5 per cent, and BMW off 2.2 per cent. The Italian-US carmaker Fiat-Chrysler slid 2.8 per cent.

And it had an impact back in the US as well, hitting the share price of American car makers like Ford, Tesla and General Motors.