European Commission President Ursula von der Leyen says the EU is “prepared for every scenario” if U.S. President Donald Trump proceeds with plans to raise tariffs on EU vehicles.

Last week, Mr Trump announced that he would increase tariffs on cars and trucks from 15 to 25 per cent, alleging the EU’s failure to comply with the trade deal.

Ms von der Leyen said on Tuesday in Armenia that the EU-U.S. trade deal was binding and set limits on tariff changes.

“A deal is a deal, and we have a deal,” she said. “And the essence of this deal is prosperity, common rules, and reliability.”

“We want from this work (to achieve) mutual gain, cooperation, and reliability. And we’re prepared for every scenario,” she added, suggesting the bloc’s potential retaliation.

Ms von der Leyen said the EU was finalising the implementation of key parts of the trade deal designed to remove tariffs on American goods.

Under the deal negotiated last July at Mr Trump’s golf course in Scotland, the tariffs on goods from the EU to the U.S. were set at 15 per cent. The EU also agreed to invest in the U.S. and to adopt measures expected to boost exports.

A joint statement last year by the EU and the U.S. said Washington was meant to reduce tariffs on EU-made cars once the legislation is introduced, not just after approval. 

The U.S. also capped tariffs on EU goods at 15 per cent, restricting additional charges.

In January, the European Parliament put the deal on hold amid tensions over Mr Trump’s threat to annex Greenland, a self-governing territory in Denmark.

“The alignment with the agreed ceiling is still outstanding,” Ms von der Leyen said and urged respect for the “different democratic procedures.”

The European Commissioner for Trade Maroš Šefčovič is expected to meet later on Tuesday with U.S. Trade Representative Jamieson Lee Greer to discuss the dispute.