The head of the World Trade Organisation (WTO) has warned a trade war sparked by US President Donald Trump would plunge the world into "deep recession".

Roberto Azevedo used remarks in Geneva to appeal for calm, saying member states must stop "the fall of the first dominoes" - hours after the European Union said it was preparing a "decisive" response to plans that, Mr Trump hopes, will bolster US competitiveness.

He prompted fury among major US trading partners worldwide last week when he announced proposals for 25% tariffs on steel products and 10% on aluminium.

His administration has since made it clear the tariffs - due to be announced formally this week - would apply to imports from any country, including Britain.

To protect our Country we must protect American Steel! #AMERICA FIRST — Donald J. Trump (@realDonaldTrump) March 5, 2018

While Theresa May has spoken to the President to outline her "deep concerns" and urged multilateral action to resolve trade issues, Downing Street has made it clear the UK's response to any tariffs would fall within EU action while the country remains in the bloc.


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European Commission spokesman Margaritis Schinas said the issue would be discussed by commissioners on Wednesday, insisting its reaction would be "swift, firm and proportionate".

He added: "When someone takes unilateral and unfair action that puts thousands of European jobs at risk we have to act.

UK Steel warns on trade war consequences

"And if the measures announced by the US President materialise in a way that affects European interests, we shall react ... in a decisive, but proportionate, and strictly WTO (World Trade Organisation)-compatible way.

"This is about Europe doing what it has to do to defend its interests. It is not about escalating anything."

However, it became clear over the weekend that tit-for-tat protectionism is on the table.

Mr Trump has responded to threats of retaliatory tariffs on top US motorcycle and jeans brands by tweeting on Sunday: "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.

"They make it impossible for our cars (and more) to sell there. Big trade imbalance!".

China and Canada have also been among the countries urging the US to show restraint.

There were signs the President was using the tariff issue as a bargaining chip during continuing North American Free Trade Agreement (NAFTA) renegotiation talks with the Canadians and Mexico.

He suggested both nations could win exemptions to his planned steel and aluminium tariffs by signing a new deal and taking further steps to ensure fair trade.

The prospect of a trade war has also unsettled investors across the world, with stock markets reflecting fears of damage to the world's economic recovery.