The world's major steel producers have threatened the US with lawsuits and trade reprisals after President Bush announced tariffs of up to 30 per cent on steel imports.
The EU swiftly condemned the decision, which is aimed at protecting the ailing US steel industry, and said it would file a complaint at the World Trade Organization (WTO).
Other major producers, including Japan, Russia, South Korea and Brazil have also vowed to fight the new tariffs.
"The US decision to go down the route of protectionism is a major setback for the world trading system," EU Trade Commissioner Pascal Lamy said in a statement.
"The EU will of course launch an immediate complaint in Geneva [at the WTO] against this clear violation of WTO rules and we will take whatever measures are necessary to safeguard our own market," Mr Lamy said.
Last night President Bush announced tariffs of up to 30 per cent on a range of steel imports. They will take effect on March 20th and will stay in place for three years.
Mr Bush exempted imports from Canada and Mexico from the protection because of their partnership with the United States in the North American Free Trade Agreement. Also under WTO rules, Bush spared imports from developing countries.
The European Commission said in a statement the EU might be forced to take trade measures of its own to protect itself from a wave of steel imports from other producers it fears may now be diverted from the US to Europe.
But the Commission added that any safeguard action would fully comply with WTO rules.
The EU response echoed anger in Asia and Latin America, but it is particularly crucial because the EU and the United States have the world's biggest trade relationship. Total bilateral trade in 2000 was over €400 billion.
A senior EU official said the US move would be seen as part of "a trend toward unilateralism in Washington".