US President Donald Trump has warned other countries against doing business with Tehran, saying he had imposed "the most biting" sanctions on the country.

"The Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level," Trump wrote in an early morning tweet Tuesday.

"Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less," he added.

His warning was apparently addressed to the EU which put into force a law banning companies from complying with US sanctions or court rulings and enabling them to claim compensation for potential damage.

British Minister of State for the Middle East Alistair Burt said Europe can protect its companies from new US sanctions which were reinstated on Tuesday, as the EU activated a blocking statute to insulate firms against any fallout.

"If a company fears legal action taken against it by an entity in response to American sanctions then that company can be protected as far as EU legislation is concerned," Burt told BBC radio.

British Minister of State for the Middle East Alistair Burt

Under the blocking statute, EU businesses can sue the US administration in the national courts of member states.

European firms must seek a legal exemption for withdrawing from Iran due to US sanctions and those failing to do so could be penalized by their governments.

Firms, however, do not need to apply for EU authorization to leave Iran if their decision is based on business grounds, making the issue a tricky one.

"It is a commercial decision for companies whether they continue to work in Iran," Burt said.

Many European companies withdrew from Iran after Trump pulled the US out of the 2015 nuclear deal with Tehran and set a grace period for firms to wind down their business in the country.

A Tehran man looks at a newspaper with the US president, Donald Trump, on the front page. (Photo by AFP)

EU officials, however, were quoted on Monday as saying that a number of other countries had asked them for details on the blocking regulations as they also explore ways to bypass sanctions.

China, Russia and Turkey have already indicated that they would not comply with the unilateral US sanctions.

The foreign ministers of France, Germany and Britain pledged in a joint statement on Monday to work on preserving financial flows and Iran’s oil and gas exports.

The German Economy Ministry said Berlin would continue to offer export and investment guarantees for firms doing business with Iran.

Senior US administration officials, however, warned that the risks were real for companies working in Iran, raising the stakes in an unprecedented standoff between traditional allies.

That means European firms have a serious balancing act for braving US penalties in order to do business with Iran.