The European Union will begin charging retaliatory import duties of 25 per cent on a range of US products from Friday.
American exports such as blue jeans and motorbikes will be targeted.
The decision was taken by the European Commission on Wednesday after US President Donald Trump's announced early this month to penalise European cars.
The move confirms a tit-for-tat dispute that could escalate into a full trade war, particularly if Trump carries out his decision to impose tariffs on EU steel and aluminium.
The European Commission formally adopted a law putting in place the duties on 2.8 billion euros ($3.2 billion) worth of US goods, including steel and aluminium products, farm produce, reports Reuters.
“We do not want to be in this position,” EU Trade Commissioner Cecilia Malmstrom said in a statement.
“The unilateral and unjustified US decision had left the EU with no choice," Cecilia Malmstrom said.
She called the EU response proportionate and in line with World Trade Organization rules.
Cecilia Malmstrom said that they would be removed if Washington removed its metal tariffs.
EU steel and aluminium exports now facing US tariffs are worth a total of 6.4 billion euros.
Donald Trump hit the EU, Canada and Mexico with tariffs of 25 per cent on steel and 10 per cent on aluminium at the start of June, ending exemptions that had been in place since March.
Canada has announced it will impose retaliatory tariffs on C16.6 billion ($12.5 billion) worth of US exports from July 1.
Mexico put tariffs on American products ranging from steel to pork and bourbon two weeks ago.
Some of the products chosen are designed to target the states of Republicans, who are seeking to retain control of both chambers of Congress in November elections.
The EU also has in reserve potential tariffs of 10 per cent to 50 per cent that it could impose on a further 3.6 billion euros of US imports in three years’ time.
