Groups representing America’s largest retailers, car manufacturers and the agriculture industry warned of the “serious negative economic impacts” of Donald Trump’s trade disputes on Tuesday and declared support for a bill that would rein in his powers.

In a letter to US senators signed by 51 trade groups, the US Chamber of Commerce and state and local business bodies, business leaders called on legislators to pass a bill that would require Congress to approve any new tariffs the president imposes based on national security concerns.

Trump has used national security concerns to impose tariffs on steel, aluminium and other goods that have triggered a global backlash from the US’s largest trading partners.

In an extraordinary letter, first reported by USA Today, some of the US’s most powerful lobby groups wrote: “It is now also increasingly clear that the way the steel and aluminium tariffs have been used will result in retaliatory tariffs from our largest trading partners and closest allies, and that retaliation will have serious negative economic impacts on the United States.”

The groups – which represent companies including Amazon, General Motors and Walmart among others – said they were “deeply concerned” about the president’s “unrestricted use of section 232” of the Trade Expansion Act of 1962, which allows the president to impose tariffs under such circumstances deemed to “threaten or impair the national security”.

They are supporting a bill introduced this month by the Republican senator Bob Corker that would hand control of section 232 back to Congress – a bill that Trump has warned Corker to drop.

The letter came as Philip Hammond, the UK’s chancellor, warned Trump that triggering a full-blown trade war would spell “disaster” for the US economy.

Firing the latest warning shot for Trump as the president ratchets up the pressure on the EU and China by promising higher tariffs on US imports, the chancellor said he still harboured hopes that a full-scale trade war could be averted.



However, he also warned a trade war between the US and its traditional allies would be a “disaster for everyone, not least for the United States”.



Speaking to the American news channel CNN while on a visit to India, Hammond warned the president against breaking the status quo of recent decades during which the White House acted as a beacon of open markets and free trade. “Now the United States is questioning the value, the fairness of some of our arrangements,” he said.



Trump threatens Harley-Davidson with 'big tax' over its tariff response Read more

The escalating tit-for-tat dispute between the White House and several other advanced economies has rocked financial markets in recent weeks. A further drop in the Chinese stock exchange on Tuesday means it has now entered a bear market, after falling more than 20% in the past six months.

Trump has promised as much as $200bn of tariffs on Chinese imports arriving in the US to remedy what he calls “unfair” trade practices being used by Beijing.



Having fallen sharply at the start of the week, shares on Wall Street and in the city staged a muted recovery on Tuesday. Technology stocks, which on Monday were among the biggest fallers after Trump’s latest trade threats hit the sector, led the recovery.



Hammond’s comments came hours before Trump launched a further attack on Harley-Davidson over its plan to move some motorcycle production to Europe in order to beat retaliatory tariffs being imposed by the EU. Trump threatened the US company with “big tax” in a series of critical tweets, which followed an initial salvo late on Monday.



Brussels last week imposed higher taxes on a wide variety of consumer goods made in the US – including motorbikes, bourbon whiskey and Levi’s jeans – in response to White House tariffs on European steel and aluminium, which Trump says are required to protect American jobs.



The president said on Tuesday his administration was getting closer to completing a study about increasing import tariffs on cars from the EU, while suggesting he would take action soon. Trump threatened last week to slap a levy of 20% on European car imports after the EU imposed its retaliatory tariffs.



Most economists believe an escalation of the dispute into a full-scale trade war would have damaging consequences for the world economy.

Greg Daco, head of US economics at the consultancy Oxford Economics, said as many as 70,000 US jobs could be lost as a result of the steel and aluminium tariffs, while as much as 0.3% of US and Chinese GDP could be lost as a result of greater trade barriers between the two countries.



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