The US and European Union have been at odds since President Donald Trump proposed a 25 percent duty on steel and 10 percent on aluminium in an attempt to hit China.
The White House said the move will help the US protect industries and jobs from unfair competition and that across-the-board tariffs are needed because countries like China use third countries for shipping steel to the US, disguising its origin.
But Brussels reacted with fury to the tariff – seen by EU Commission boss Jean-Claude Juncker as a “blatant intervention to protect US domestic industry”.
EU Commission vice-president Valdis Dombrovskis said: “It has been announced that the EU is going to react to the situation if this President Trump’s initiative on tariffs on steel and aluminium goes through.
“We are assessing what are the options for our actions. In any case, we’ll react in a firm and proportionate way within WTO rules.”
EU trade chiefs are thought to be considering whether or not to impose a 25 percent tax on around $35.5billion of US imports.
Mr Dombrovskis added the EU hopes President Trump can change his mind and seek an alternative arrangement to tariffs but remained ready to impose its own duties.
He told Bloomberg: “We hope that eventually this initiative from the US side will not be followed through and they will not make that unilateral moves which are not in line with WTO provisions.
“It’s also clear that the EU will need to react if that kind of one-sided tariffs are going to be imposed by the US.”
It comes as Mr Trump’s chief economic advisor Gary Cohn announced his resignation after failing to persuade the President to reconcile with the EU.
Earlier this week, Mr Trump took aim at the EU27 bloc for “not treating the US well” and creating a “very, very unfair trade situation”.
He said: “We have a trade deficit of $800billion a year, and the European Union has been particularly tough on the United States.
“They make it almost impossible to business with them, and yet they send their cars and everything else back into the United States.
“If the European Union takes off some of the horrible barriers that make it impossible for our product to go into there, then we can start talking.Otherwise, we’re going to leave it as it is. We have no choice but to straighten it out.”