Under pressure from many of his top advisers to lift tariffs on steel imports, US President George W Bush may be moving in that direction to avert a trade war with Europe, Republican sources and analysts have hinted.
That could spark a political backlash from steel makers and workers in next year's presidential election.
The White House said no decisions have been made and officials have not publicly ruled out the possibility that the administration could flout the World Trade Organisation by keeping the tariffs in place.
Administration sources said Mr Bush, who came to office championing free trade, has begun final deliberations and could make his decision as early as next week.
Republican sources and analysts say the administration appears to be leaning toward removing - or at a minimum scaling back - protections for US steelmakers for a host of reasons, not the least of which is the EU's threat to retaliate on $2.2 billion of American exports.
"I believe that's a distinct possibility given what the WTO seems to be saying," said Mr Vin Weber, an influential Republican lobbyist who was among those representing the US steel industry during the fight to impose the tariffs.
The WTO's highest court ruled on Monday that US steel duties violated international trade laws, and the European Union has threatened to retaliate by mid-December if Washington refuses to back down.