TARIFFS could be slapped on British goods as raging Brussels prepares legal action in its bitter row with Boris Johnson over Northern Ireland.
The EU is readying to sue the UK after No 10 suspended checks on supermarket goods going from the mainland to Northern Ireland for another six months.
Eurocrats are also threatening to block the City of London's access to European markets in light of the move.
Ireland's foreign minister Simon Coveney said the decision showed Downing St "cannot be trusted" to stick to the terms of the Brexit deal.
British officials insist it doesn't break the terms of the pact and is needed to stop supermarkets in NI running short on food next month.
They've accused the EU of "hypocrisy" for complaining after it destabilised NI at the end of January by threatening to trigger a vaccines border.
But furious Brussels has accused the UK of attempting to break the terms of last year's Brexit deal for the second time in less than six months.
They are readying a response that may include dragging Britain in front of euro judges and triggering the dispute system in the trade deal.
The EU's top court has the power to hand down multi-million pound fines if the UK is found in breach.
And the arbitration panel set up by the trade deal could green light the EU to hit UK goods with tariffs if it finds in favour of Brussels' complaint.
Any import taxes would have to be proportionate to the cost of Britain's move to the EU's market.
Irish eurocrat Mairead McGuinness, the bloc's banking chief, said Brussels will also "send a message" the move could hit access for the City.
She said: "Things like that don't help build trust."
Mr Coveney said the EU has been left with "no option" but to take legal action "and that is not where we want to be".
And in signs the relationship is becoming increasingly unstable MEPs have threatened to refuse to sign off on the trade deal.
Last year's pact is currently only provisionally agreed and needs to be fully ratified by the EU Parliament in a vote next month.
Christophe Hansen, a lead MEP on Brexit, said No 10 "should be mindful of the fact that the European Parliament has not ratified yet".
German euro MP Bernd Lange, chair of the trade committee, branded the UK's move an "incredibly aggressive act".
A series of grace periods exempting GB-NI trade from some checks are due to run out on March 31.
British ministers have been locked in difficult talks with the Commission about extending them for up to another two years.
But with the clock running down UK officials have moved to ensure if negotiations don't succeed new barriers to trade won't be imposed right away.
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