The US has announced plans to impose tariffs on steel and aluminium from the EU starting at midnight.
US President Donald Trump announced in March that he would slap a 25% tariff on imported steel and a 10% tariff on imported aluminium, citing national security interests.
But he had granted an exemption to the EU and other allies, including Canada and Mexico.
That exemption was due to expire on Friday.
US Commerce Secretary Wilbur Ross said talks with the EU had made progress but not enough to continue the exemptions.
Talks with Canada and Mexico over the North American Free Trade Agreement had been “taking longer than we had hoped”, he said.
He added: “We look forward to continued negotiations, both with Canada and Mexico on the one hand, and with the European Commission on the other hand, because there are other issues that we also need to get resolved.”
European and US equities lost ground slightly on fears the US measures could spark a trade war.
The UK government said it was “deeply disappointed” by the decision, adding that the UK and other EU countries are close allies of the US and should be “permanently and fully exempted” from the tariffs.
Jean-Claude Juncker, president of the European Commission, said: “This is a bad day for world trade” and that the tariffs were “totally unacceptable”.
EU trade commissioner Cecilia Malmstrom said: “The US has sought to use the threat of trade restrictions as leverage to obtain concessions from the EU.
“This is not the way we do business, and certainly not between longstanding partners, friends and allies.
“Now that we have clarity, the EU’s response will be proportionate and in accordance with WTO rules.
“We will now trigger a dispute settlement case at the WTO, since these US measures clearly go against agreed international rules.
“We will also impose re-balancing measures and take any necessary steps to protect the EU market from trade diversion
caused by these US restrictions.”
There were also strong words from Manfred Weber, a German politician and Leader of the European People’s Party in the European Parliament.
He wrote on Twitter: “…if Donald Trump decides to treat Europe as an enemy, we will have no choice but to defend European industry, jobs and interests.
“We will not accept this highly regrettable decision without reacting.”
But, speaking on CNBC, Mr Ross said any retaliatory measures against the US would be “unlikely to have much effect” on the US economy.
When asked about the recation form the EU, he was quoted as saying he believed that “everyone will get over it in due time”.
Sky’s US correspondent Mark Austin said: “It’s not a good atmosphere for any sort of negotiations about a separate trade deal between Britain and the US in a post-Brexit world.
“It does look as if Donald Trump’s administration is going to go the route of conflict on trade.”
The Confederation of British Industry’s international director Ben Digby said the measures were “deeply concerning” for UK businesses.
“There are no winners in a trade war, which will damage prosperity on both sides of the Atlantic.”