The World Trade Organisation has given the go-ahead for the European Union to introduce sanctions against the US.
The EU may now hit the US with import tariffs
Its judgement in favour of the EU is in regard to America's failure to repeal an 88 year old law that allows US firms to sue low price importers.
The WTO said the 1916 Anti-Dumping Act was illegal almost four years ago, but it still hasn't been overturned by the US Congress.
Last December a Japanese exporter to the US was fined $31.5m under the law.
A federal jury awarded the money to Illinois-based Goss International after it successfully claimed the Japanese firm in question was selling printing presses at lower than cost price, ie dumping them on the US market.
According to the EU, three European companies are still facing such actions.
The WTO found the law illegal in March 2000 because under its rules for global trade, import tariffs are the only remedies allowed to combat dumping.
By contrast the Anti-Dumping Act can impose fines on both firms and individuals, who it can also imprison.
The US unsuccessfully appealed against the WTO ruling and was eventually given until December 2001 to repeal the law.
This it obviously failed to do and the European Union pressed the WTO for permission to impose retaliatory trade sanctions.
"The decision of the arbitrators is a welcome reaffirmation that the WTO is a rule-based system and members may not ignore their obligations with impunity," said EU Trade Commissioner Pascal Lamy.
He added: "I hope that rapid action from US Congress will make sanctions unnecessary."
The WTO's ruling against the Anti-Dumping Act comes a week before the EU is timetabled to start imposing sanctions of 290m euros ($370m; £196m) in regard to a completely separate trade dispute over tax breaks for US companies.
And in another case the US has been ordered to drop its tariffs on steel imports.