The EU executive said it wanted to engage with the US after President Donald Trump threatened tariffs on European countries in the standoff over Greenland, but was ready to act if needed.
"Our priority is to engage, not escalate," European Union trade spokesman Olof Gill said, but he added: "Should the threatened tariffs be imposed, the European Union has tools at its disposal and is prepared to respond."
EU leaders will meet on Thursday evening for an emergency summit.
The crisis talks in Brussels come as the 27-nation bloc weighs potential countermeasures against the United States if Mr Trump follows through on punishing some of Washington's closest allies.
Mr Trump vowed on Saturday to hit European countries - including Denmark, of which Greenland is an autonomous territory - with tariffs of up to 25% unless Greenland is ceded to the United States.
Britain, Denmark, Finland, France, Germany, the Netherlands, Norway and Sweden already hit back at the threat in a joint statement at the weekend.
Germany's vice chancellor Lars Klingbeil, at a Berlin press conference alongside the French economy and finance minister, Roland Lescure, said Europe's response could have three main strands.
First, the current tariff deal with the United States would be put on hold, he said.
Second, European tariffs on imports from the United States, currently suspended until early February, could come into force, said Mr Klingbeil, who is also Germany's finance minister.
And thirdly the EU should consider using its toolbox of instruments that can be deployed to respond to "economic blackmail" against Washington, he added.
Mr Lescure agreed with Mr Klingbeil that Mr Trump's threat amounted to "blackmail".
"Blackmail between allies of 250 years, blackmail between friends, is obviously unacceptable," said the French minister.
"We Europeans must remain united and coordinated in our response and, above all, be prepared to make full use of the instruments" of the European Union, he said.
"We are determined to defend our sovereignty."
Mr Klingbeil stressed that the "limit has been reached" when it came to the US leader making threats.
"We are constantly experiencing a new confrontation that President Trump is seeking," he said.
Mr Trump last night said that Denmark has not been able to do anything to get the "Russian threat" away from Greenland, and said: "Now it is time, and it will be done!"
"NATO has been telling Denmark, for 20 years, that "you have to get Russian threat away from Greenland," Mr Trump said.
"Unfortunately, Denmark has been unable to do anything about it," he wrote in a post on his social media platform Truth Social.
Leaders of both Denmark and Greenland have insisted the island is not for sale and does not want to be part of the United States.
Danish and other European officials have pointed out that Greenland is already covered by NATO's collective security pact.
EU member states yesterday hinted at deploying their most punitive trade measures against the Trump administration in light of the imposition of tariffs on countries which are opposed to Mr Trump's determination to acquire Greenland.
Denmark 'will not give up' on constructive Greenland dialogue, Danish Foreign Minister says
Following an emergency meeting of EU ambassadors yesterday, diplomats said member states would decide after 1 February whether or not to revive €93bn in retaliatory tariffs against the US.
The measure had been suspended since a framework EU-US trade deal was signed last summer.
Last night European Commission President Ursula von der Leyen spoke to the NATO secretary general, as well as the leaders of France, Germany, Italy and the UK, as transatlantic relations continue to sink to their lowest post-war level.
Diplomats said there was no question yet of Europe reaching for its most punitive trade measure, known as the Anti Coercion Instrument, in response to Mr Trump’s stunning imposition of tariffs on eight countries over his desire to own Greenland.
However, calling an extraordinary meeting of EU leaders for Thursday, the president of the European Council António Costa said the EU was ready to defend itself against any form of coercion.
Member states appear anxious to keep the diplomatic track open, while still proclaiming the sovereignty and territorial integrity of Greenland and the Kingdom of Denmark are not up for negotiation.
The emphasis will now shift to the World Economic Forum which opens later today in the Swiss ski resort of Davos.
Eight EU leaders, including Taoiseach Micheál Martin, will be there, as well as Ms von der Leyen and NATO secretary general Mark Rutte.
There will be a concerted effort to attempt to steer Mr Trump away from a trade war - or even a military attempt on Greenland - ahead of his address to the forum on Wednesday afternoon.
But Mr Trump now has a long track record of soaking up European flattery and ingratiation, only to unleash further hostility and vilification on his supposed allies some time later.
Harris to attend EU ministers meeting on US levy threats
Tánaiste Simon Harris is in Brussels for a meeting of EU finance ministers, which is set to be dominated by concerns over Mr Trump's tariff threats.
Speaking ahead of the meeting, the Tánaiste and Minister for Finance said EU officials worked to strike a tariffs deal with the US last year to ensure "certainty and clarity" for the economy.
He added that the latest threats are "a clear breach of that agreement".
Mr Harris said any new tariffs would be damaging to the EU economy, supply chains and open trade, adding such levies must be avoided.
He said: "I intend to raise with my European counterparts the latest economic developments with the US, including those linked to Greenland.
"At a time of heightened global uncertainty, it is vital that we avoid actions that risk further instability.
"The focus must be on working together to protect all of our economies across the EU."
Read more:
Tariff threat risks most serious crisis yet in transatlantic relations
Why Europe has drawn a line in the snow in Greenland
The Minister for Foreign Affairs and Trade said it is important there are no knee jerk reactions to the tariff threats.
Speaking on RTE's Morning Ireland, Helen McEntee said she believes that the EU is united in its response to Mr Trump and trade wars do not benefit anyone.
"From Ireland's perspective, our view is that the first step needs to be dialogue and engagement, and that even in itself, within the anti-coercion instrument, that is the first step there. How do we engage? What are the options here for us?"
Ireland is clear and unequivocal in its support for Greenland, Minister McEntee said, and despite Ireland's excellent relationship and ties with the US, "we will not fail" to call out wrongdoing when we see it.
Additional reporting AFP, Reuters
