The EU is poised to launch legal action over Boris Johnson's Brexit plans, which have been compared to someone deciding they don't want to pay their mortgage.
Tensions with Brussels have erupted after the UK published controversial legislation to tear up parts of the PM's Brexit deal governing Northern Ireland.
Foreign Secretary Liz Truss said there was "absolutely no reason" for the EU to retaliate over the plan to scrap post-Brexit checks in Northern Ireland, which have angered unionists and caused disruption for some businesses.
Ministers published the new bill on Monday which would allow the UK to override parts of the deal without permission from Brussels.
But Commission vice president Maros Sefcovic warned the EU could launch legal action against the UK, with an official response expected on Wednesday.
Irish Foreign Minister Simon Coveney said British-Irish relations had plunged to a "new low" following the publication of the legislation - and warned it would break international law.
Mr Coveney told Today: "This is not consistent with the British Government's obligations under international law.
"That will be shown with time but more concerningly, I think this is really a new low in British-Irish relations in the last 25 years or so."
He added: "This is like someone who takes out a mortgage and then decides a year later, 'Sorry I don't want to pay any longer', and says to the bank, 'Here's how I'm going to pay and you're going to accept it'."
Critics have argued that Mr Johnson's attempts to force his Brexit deal over the line have created this situation, which has seen stalemate at Stormont as the Unionist DUP refuse to restart power-sharing.
A majority of members of the Northern Ireland assembly accused the PM of being "reckless" by destabilising the Good Friday agreement.
Ms Truss said there was "absolutely no reason" for the EU to retaliate, telling TimesRadio: "Our solution doesn't make the EU any worse off," she told Times Radio
"We continue to protect the single market, we're supplying the EU with data, we've got strong enforcement to make sure companies aren't violating the rules.
"So there is absolutely no reason why the EU should react in a negative way to what we're doing."
She argued that the UK needs to rip up Boris Johnson's deal to protect the Good Friday Agreement, which enshrines peace in Northern Ireland.
She told the BBC Good Morning Ulster programme: "The fact is that the Belfast/Good Friday Agreement is being undermined. We haven't seen an Executive formed since February, we have seen east-west trade diminished, trade diverted to north-south. We've also seen the people of Northern Ireland not able to benefit from tax breaks.
"These are all issues that we need to sort out. Our preference is to sort them out with the EU, but as yet the EU are not agreeing to change the text of the protocol."
But Mr Coveney said "it is going to destabilise what is already a difficult situation".
In a boost to the Government however, the US signalled that the dispute would not undermine trade talks. President Joe Biden, who is proud of his Irish roots, takes a close interest in issues relating to the Good Friday Agreement.
White House press secretary Karine Jean-Pierre said: "We recognise there have been challenges over the implementation of the Northern Ireland Protocol.
"We urge the UK and the EU to return to talks to resolve these differences. "
Business leaders urged Boris Johnson not to enter a "damaging trade war" with the EU over the issue.
Stephen Phipson, chief executive of Make UK, said: "We recognise that the protocol in the current state does need to be changed.
"But the way to do this is not to start a trade war with the EU in the middle of a financial crisis which would be damaging for both British and EU businesses alike and put further strain on already stretched supply chains."
Richard Burge, chief executive of the London Chamber of Commerce and Industry, said the Government's action risked "significant harm" to businesses across the UK.
"Getting Brexit done was at least meant to deliver certainty to businesses after years of waiting for clarity on the future of the UK's trade relations with the European Union," he said.
"The introduction of this Bill means we are now teetering on the brink of a trade war with the EU and that will mean further economic pain and falls in investment."
