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.
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.
These tariffs could lead to a protectionist domino effect, damaging firms, employees and consumers in the USA, UK and many other trading partners.
Now is not the time for any disproportionate escalation, and we urge the EU to consider this when initiating its response.