The US President made his remarks during the course of an extraordinary press conference at Chequers held jointly with UK Prime Minister Theresa May.
Mr Trump has sparked fears of a trade war with the bloc after his decision to impose tariffs of 25 percent and 10 percent on imported steel and aluminium respectively.
And he showed little sign of backing down during a characteristically bullish performance in front of journalists from all around the world.
He said: “We do not have a fair deal with the European Union right now on trade.
“They treat the United States horribly and that is going to change.
“And if it does not change they are going to have to pay a very big price and they know what that price is.
“They are coming over on July 25 to see me and hopefully we can work something out.”
Mr Trump described EU trade barriers against US goods as “beyond belief”.
He added: “They won’t take our farm products.
“They won’t take many of our things including our cars.
“They charge us tariffs on cars far greater than we charge them.
“Last year we lost $151billion with the European Union. We can’t have that.”
During the course of the press conference, Mr Trump backtracked from quotes attributed to him about Brexit in an exclusive interview with The Sun.
The Sun quoted Mr Trump as saying: ““If they do a deal like that, we would be dealing with the European Union instead of dealing with the UK, so it will probably kill the deal.
“I would have done it much differently.
“I actually told Theresa May how to do it but she didn’t agree, she didn’t listen to me.”
When pressed by reporters about the article, Mr Trump denied criticising Mrs May – and branded the newspaper “fake news”
However, he acknowledged that he had given her a “suggestion” on how to proceed.
He said: “I think she maybe found it maybe too brutal.
“Maybe someday she will do that if they don’t make a good deal.
“The EU has taken advantage, systemically, of the US on trade. It’s a disgrace.”