The EU has warned Donald Trump that it will launch tough new levies on US exports of bourbon, peanut butter and motorbikes if he pushes forward with plans to impose steel and aluminium tariffs.
Meanwhile 18 WTO members, including China and Russia, have expressed grave concerns about the impact of a potential trade war.
The EU's commissioner in charge of trade, Cecilia Malmstrom, this morning said she had drawn up a "provisional" and "proportional" hit list - thought to total £283bn annually - which she was ready to deploy if the US went ahead with its threatened tariffs. However she noted: "A trade war has no winners".
Malmstrom confirmed that it included steel products, Levi jeans, bourbon, peanut butter, cranberries and orange juice.
"Very soon that list will be public, so you will be able to plan your whiskey drinking,” she said.
So far it appeared the US was poised to impose the tariffs globally, but she hoped that as "a security partner" the EU be excluded.
Malmstrom described the move as "alarming", adding: "We have serious doubt about the [security threat] justification. We cannot see how the EU, as friends and allies in Nato, can be considered a threat to international security in the US."
"We have serious doubts about whether this measure is WTO compatible."
As a result, she said the EU was appealing to the World Trade Organisation, potentially alongside other affected countries, but said the bloc was ready to impose retaliatory tariffs as a "quicker" measure.
Shortly after she spoke, the WTO revealed that 18 member states, led by China, expressed strong concerns over the move. Canada, Turkey, Russia, Australia, South Korea, Japan, Mexico, India and Brazil have raised commercial and systemic concerns, and suggested it might prompt tit-for-tat reprisals.
Speaking at a later event, European Council President Donald Tusk said he would introduce an extraordinary debate to allow leaders to discuss the measures.
He added: "Trump recently said trade wars are good and easy to win, but the truth is opposite - they are bad and easy to lose."
The US President last week announced the introduction of a 25 per cent on steel imports into the country and 10 per cent on aluminium, insisting they were necessary to protect the US' declining industries.
He hit back at suggestions it could lead him into a trade war with other nations, saying "trade wars can be good".
Last night his most senior economic adviser and free trade advocate Gary Cohn quit over the escalating situation, and will leave his post in the coming weeks.
This morning IMF boss Christine Lagarde weighed in, saying "nobody wins" in a trade war. "One generally finds losers on both sides," she added.
“The macro-economic impact would be serious, not only if the United States took action, but especially if other countries were to retaliate, notably those who would be most affected, such as Canada, Europe, and Germany in particular.”
Fawad Razaqzada, a market analyst at Forex said if Trump's proposals made it into law, the impact would be felt "heavily" on shares in steel and aluminium manufacturers and exports, like Rio Tino, which is the biggest supplier of aluminium to the US from its Canadian smelters.
"The impact of the tariffs would not just hit Mexican and Canadian firms, but perhaps European and Asian companies, too. Carmakers whose plants are based in the US would see their costs go up and hit their share prices," Razaqzada said.
Ken Odeluga, a market analyst at City Index, said Volkswagen, BMW and Daimler's earnings this month and next would be under the microscope over whether their margins could take the pressure of rising prices.
At the weekend, Theresa May called Trump to warn of her "deep concern" over his unilateral decision, urging "multilateral action" as the way forward. The steel association and a body representing motorcycle manufacturers have warned of the economic impact - including job losses - that an all-out trade war will incur.
Jean-Claude Juncker said last week that a retaliation was on the cards, saying of Trump's move: "This is a stupid process. But we can also do it. We will now impose tariffs on motorcycles - Harley Davidson, on blue jeans - Levis, on Bourbon.
"We can also do stupid. We also have to be this stupid."