US tax reforms could breach international rules and damage world trade, Donald Trump has been warned by Chancellor Philip Hammond and other EU finance ministers.
Mr Trump's government was the recipient of a strongly-worded letter put together by ministers from the five largest EU economies. The letter said that US domestic tax policy must be in line with its international treaty obligations.
There is concern within Europe that the new measures, which are currently going through Congress, could damage EU companies.
"While the establishment of a modern, competitive and robust tax system is one of the essential pillars of a state's sovereignty, it is important that the US government's rights over domestic tax policy be exercised in a way that adheres with international obligations to which it has signed up," the ministers said.
"The inclusion of certain less conventional international tax provisions could contravene the US's double taxation treaties and may risk having a major distortive impact on international trade."
One piece of legislation pointed out in the letter is a planned 20 per cent "excise tax" which would be put on to purchases by US companies from foreign subsidiaries, a tax which would not be place on domestic transactions.
"Given that this measure would impact on genuine commercial arrangements, and would do so only where payments are being made for foreign goods and services, it could discriminate in a manner that would be at odds with international rules embodied in the WTO (World Trade Organisation)," the letter said.
"Bearing in mind that almost half of transatlantic trade is intra-company trade, this risks seriously hampering genuine trade and investment flows between our two economies, which remain a central artery of the world economy."
The letter, addressed to US treasury secretary Steven Mnuchin, is signed by Germany's Peter Altmaier, France's Bruno Le Maire, Italy's Pier Carlo Padoan and Cristobal Montoro of Spain as well as Mr Hammond.
This is just the latest diplomatic issue between the US and UK following on from Theresa May's criticism of Mr Trump's retweeting of inflammatory anti-Muslim videos which were originally posted by the deputy leader of the far right Britain First organisation.