Donald Trump has ratcheted up the risk of a global trade war, saying the US could pull out of the World Trade Organisation while rejecting an EU offer to cut tariffs on cars.

The US president said America was being treated badly by WTO rules, adding that if the trade body “does not shape up, I could withdraw from the WTO”.

Mr Trump has been highly critical of the WTO in the past, saying it “needs to change its ways”. US trade officials say the decision to admit China to the global trade body in 2001 was a mistake because the WTO system cannot work with a non-market economy.

Mr Trump withdrawing the US from the WTO could prove more serious to the global economy than its simmering trade dispute with China.

So far this has involved tens of billions of dollars in tariffs being imposed in tit-for-tat moves on the import of each other's goods, with the US most recently threatening to slap another $200bn (£154bn) of levies on products arriving from China.