President Bush has said he will decide "within a reasonable period of time"whether to scrap controversial tariffs on imported steel.
Mr Bush's steel tariffs are turning into an embarrassment
The World Trade Organisation (WTO) ruled on Monday that the tariffs broke international trade rules.
Mr Bush said he would decide after reviewing the state of the US steel industry.
The WTO upheld the European Union's(EU) right to impose sanctions if the US does not back down.
Penalties on the way
President Bush said on Thursday he was examining how far the US steel industry has restructured since his administration imposed the tariffs on steel imports in early 2002.
The European Commission has drawn up a hit list of US imports worth about $2.2bn a year - including citrus fruits and textiles - which will be targeted with retaliatory sanctions.
EU trade commissioner Pascal Lamy has said the retaliatory tariffs could be imposed in early December if the US does not now back down.
The hit list is said to have been calculated to inflict maximum pain on states whose support will be crucial to President Bush's re-election campaign next year.
The Bush Administration has argued from the beginning that the tariffs were needed to give US steel producers a breathing space to restructure.
However, the tariffs have become a political embarrassment at home as well as abroad.
Trade gap grows
US steel consumers argue that the tariffs have increased their costs and destroyed more jobs in manufacturing than they have saved in steel production.
Meanwhile the US trade deficit with the rest of the world continues to grow. It widened to $41.3bn in September, up 4.4% on August, according to US Commerce Department data released on Thursday.
Imports were at a record high of $127.4bn, up 3.3% on August.
However, exports also rose 2.8% to $86.2bn, touching their highest level since May 2001.