The BBC's Peter Morgan: Mr Blair clearly thinks the White House is completely in the wrong

Mr Byers branded the US announcement that importers would need to buy bonds to cover a range of European goods "irrational and unacceptable".

The UK Government will step in and guarantee the bonds being demanded by US customs on cashmere imports, Mr Byers said.

Trade Secretary Stephen Byers' Parliamentary statement

Department of Trade and Industry sources said the bonds effectively amounted to 100% tariffs.

As such they may pose a threat to jobs in the EU and the UK, it said.

Prime Minister Tony Blair later added his voice to the government's chorus of determination to stand up to the United States on this issue.

Stephen Byers: "We've taken steps to protect jobs and industry"

During a visit to Glasgow, Mr Blair said he would do everything possible to protect the Scottish textile industry from trade tariffs.

The prime minister said: "No-one should be in any doubt about our determination to make sure British jobs and Scottish jobs are protected.

"As a result of what we have already done, we have managed to get this decision postponed.

The BBC's Colin Blane: "Everyone in the Borders knows the importance of cashmere"

"It is still unacceptable but we have made the arrangements necessary and given the companies guarantees that will help them keep going."

More than 2,000 Scottish jobs depend on the cashmere industry, which made exports worth about £18m to the United States last year.

Cashmere jobs at risk

Emerging from the meeting with Mr Byers, Mr Lader told reporters it had been "very cordial". "We met as friends and our relationship continues very much as friends," he said.

"I think it is very important for us all to recognise that this issue is not about bananas, it's not about cashmere, it's about the WTO rules and regulations.

He and Mr Byers had had "a very thorough conversation" would continue to seek "a working solution in the context of the extraordinary friendship between our two countries".

Responding earlier to an emergency Commons question, Mr Byers told MPs the British cashmere knitwear industry could be badly affected by "completely unauthorised" US actions.

Stephen Byers: Attacks US moves as "completely unauthorised"

But Tories criticised the government for not taking action sooner.

The row over bananas centres on American complaints that the EU gives unfair import preference to bananas from former British and French colonies in the Caribbean.

They say this comes at the expense of US firms seeking to export bananas from the dollar economies of Latin America.

Ruling awaited

Mr Byers explained that the dispute had been put to the World Trade Organisation arbitrator, which has delayed a final ruling.

BBC Political Correspondent Sean Curran: US sanctions could force many UK companies out of business

He said: "We are firmly of the view that this prejudges the panel ruling and is contrary to the WTO dispute settlement rules."

The US argued the duties would not be applied until after the arbitrator had ruled.

Mr Byers said: "The practical effect of their measure is the same as if they applied now, since exporters have to put up a bond to cover possible duties in the future.

"I deplore the action which the US has taken.

"It is completely unauthorised by any WTO procedures and wholly ignores the arbitrator's appeal for discussions to continue."

Mr Byers said: "Even now it is not too late for the US to reverse this decision in the interests not only of EU-US relationships, but to safeguard the whole framework of dispute settlement in the WTO."

Liberal Democrat MP Archy Kirkwood demanded: "What have the people of the Borders done to incur the wrath of the Americans?

"This outrageous action must be blocked and government assistance guaranteed to every local cashmere business."