The White House announced on Wednesday it would allow US citizens to sue foreign firms that do business deals involving property seized during the 1959 Cuban revolution.
The new rule, which will likely open EU businesses up to lawsuits from America, comes amid a backdrop of US-EU trade tensions and a hardening policy in Washington against the Caribbean state.
Companies from Europe and other parts of the world have established growing business interests in Cuba in the decades since the end of the Cold War, but the US has maintained a strict embargo on the country since the early 1960s.
The new powers, which ban “trafficking” in property seized during the Cuban revolution, were included in the 1996 Helms Burton Act signed in law by Bill Clinton, but were never actually used until now.
Brussels says the move to trigger the sanctions by the US is “contrary to international law” and a breach of a number of treaties signed by Mr Trump’s predecessors.
"In the light of the United States Administration's decision to not renew the waiver … the European Union reiterates its strong opposition to the extraterritorial application of unilateral Cuba-related measures that are contrary to international law," the EU's foreign affairs chief Federica Mogherini and trade chef Cecilia Malmström said in a joint statement.
“This decision is also a breach of the United States' commitments undertaken in the EU-US agreements of 1997 and 1998, which have been respected by both sides without interruption since then.
“In those agreements, the US committed to waive Title III of the Helms-Burton Act and the EU, inter alia, suspended its case in the World Trade Organisation against the US.”
The two EU chiefs added that the EU would “consider all options at its disposal to protect its legitimate interests”, including action against the US at the World Trade Organisation.
Brussels also said any European companies sued in the US would be allowed to recoup any damages through EU courts.
Speaking on Wednesday US Secretary of State Mike Pompeo hailed the new measures, telling reporters: “Citizens’ opportunities for justice have been put out of reach for more than two decades.
“Any person or company doing business in Cuba should heed this announcement.”
The latest move by the US mirrors a similar policy of targeting European countries doing business with Iran. In response, the EU updated its blocking statute to help European firms do deals with the middle eastern country. The EU says the lifting of sanctions against Iran is vital so that the country can see the benefits of its cooperation on curtailing its nuclear programme.