The European Commission has said it will take a dispute settlement case at the World Trade Organisation against US tariffs on steel and aluminium imports.
US President Donald Trump said back in March that he would slap a 25% tariff on steel and a 10% tariff on aluminium, citing national security interests.
The levies have now been imposed on the EU, Canada and Mexico, after they were previously granted exemptions.
The EU Commissioner for Trade Cecilia Malmström said the US is "playing a dangerous game" and that the EU will introduce counter-balancing measures.
She also denied the re-balancing measures were escalating the situation.
— European Commission ???? (@EU_Commission) June 1, 2018
The US measures affect EU exports worth €6.4bn in 2017.
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."
US stocks have fallen since the news broke.
Canada has also hit back, announcing retaliatory duties on American goods worth up to Can$16.6bn (€10.9bn).
Canadian Prime Minister Justin Trudeau said the US tariffs were "totally unacceptable."
"These tariffs are an affront to the long standing security partnership between Canada and the United States, and in particular, an affront to the thousands of Canadians who have fought and died alongside their American brothers in arms," he said, noting the US national security justification for its measures.
Jean-Claude Juncker, president of the European Commission, said earlier it was "a bad day for world trade" and, echoing Mr Trudeau, called the tariffs "totally unacceptable".
It’s a bad day for world trade. US leaves us no choice but to proceed with a WTO dispute settlement case and the imposition of additional duties on a number of US imports. We will defend the EU’s interests, in full compliance with international trade law. https://t.co/J3wPW5Ew7K pic.twitter.com/aDlOWcSgRv
— Jean-Claude Juncker (@JunckerEU) May 31, 2018
The American Chamber of Commerce Ireland has said it supports the American Chamber EU's call for the EU to receive a permanent exemption.
Mark Redmond, chief executive of American Chamber Ireland said: "We agree with AmCham EU’s statement that the EU and the US should be working together to tackle issues such as global steel/aluminium overcapacity and unfair trading practices.
"We also support AmCham EU’s view that with growth on the increase in Europe and the US, now is the time to focus on a positive agenda that further strengthens our economies."
The British government said it was "deeply disappointed" by the decision, adding that the UK and other EU countries were close allies of the US and should be "permanently and fully exempted" from the tariffs.
Germany's chancellor Angela Merkel said the tariffs were "illegal" and risked an "escalation spiral" in global trade.
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 reaction from the EU, he was quoted as saying he believed that "everyone will get over it in due time".
European and US equities lost ground slightly on fears the US measures could spark a trade war.