The Trump administration is poised to rule that car imports into the United States pose a legitimate threat to national security, clearing the way for draconian tariffs of up to 25pc on shipments from Europe and the rest of the world.

A contentious and long-running probe by the US commerce department is to issue its verdict on Sunday. Trade experts say the broad thrust is already known and the dossier is sitting on the Oval Office desk of President Donald Trump.

“We think they will find some kind of national security threat. This was probably predetermined in advance, although nobody will admit that,” said William Reinsch, the veteran ex-chief of the National Foreign Trade Council.

The White House will have 90 days to respond, picking from a menu ranging from targeted measures on hi-tech components and electric vehicles all the way up to 25pc tariffs on all imported cars, as favoured by in the past by Mr Trump.

Such drastic action would effectively shut down 10pc of trans-Atlantic trade and lead to retaliation across the world, causing havoc for complex supply chains. It would revive fears of a tit-for-tat trade war between the world’s two biggest blocs and bring the rally on equity markets to a shuddering halt.

Germany’s WirtschaftsWoche reports that the EU has already drawn up plans for €20bn of counter-sanctions if need be, targeting Tesla, electric vehicles, and a spectrum of other products.

Tariffs of 25pc would be a hammer blow for the UK auto industry at a time when it is already grappling with Brexit. Britain is Europe’s second biggest car exporter to the US by a wide margin.

Sales rose to 221,000 last year led by plants from Honda, Landrover, and BMW. The shipments were worth over $8bn and accounted for 18pc of total UK car exports. It is are a rare case where the UK enjoys a large trade surplus. It is not clear whether Britain would be exempted after a no-deal Brexit.

Mr Reinsch, now at the Centre for Strategic and International Studies, said the White House aims to use the findings as a stick to beat to Europeans until they agree to ‘voluntary’ quota limits along the lines of Reagan-era deal with Japan in the 1980s. “It is not about tariffs, it is about leverage,” he said.

The administration will take advantage of Europe’s slide into industrial recession to ratchet up the pain. “If Trump thinks you are weak, he will push you,” he said.

A trade truce agreed by last July by Mr Trump and EU commission president Jean-Claude Juncker is unravelling. The EU thought it had secured a pledge for a free trade pact with zero tariffs for most industrial products, locking in the EU’s surplus in goods trade while excluding its protected farm sector.

This was too good to be true for the Europeans and has since been torn to shreds in Congress. “I don’t know how anybody in Europe that wants a free trade agreement can expect it to get through the US Senate if you don’t want to negotiate agriculture,” said Senator Chuck Grassley, an Iowa farmer and chairman of the Finance Committee.

Marie Kasperek from the Atlantic Council said a resolution by Euro-MPs could finish off any hopes of a bilateral trade deal. The text passed by the European Parliament’s trade committee - and due to go to a full vote next week - lashes out at Mr Trump, denounces his Iran policy, and calls the current US steel tariffs a violation of WTO rules.