The EU says it will act “decisively” if the US goes ahead with a threat to put new tariffs on its goods.
This is the latest twist in a long-running row with Washington over subsidies granted to the plane-maker Airbus.
The EU and US have accused each other of propping up their home aviation markets with tax breaks, research grants and other aid For more than a decade, and that has been going on for decades.
Last month, the US threatened duties on EU goods such as beer, gin and olives, escalating the row.
On Monday, Europe’s trade commissioner, Phil Hogan said Washington had rejected moves to settle the dispute.