JERUSALEM — In a stinging rebuke to Israel, the European Union insisted on Wednesday that some goods produced on land seized in the 1967 war must be labeled “made in settlements,” a mandate that added to Israel’s deep unease over a growing international boycott.

European officials tried to play down the decision, saying the guidelines merely clarified existing rules. But the move exacerbated already simmering tensions between Israel and Europe as Israeli politicians condemned it as an echo of the Holocaust-era branding of European Jews and their storefronts with yellow stars.

The European Union is Israel’s top trading partner, though products from the occupied West Bank, the Golan Heights and East Jerusalem that will now require special labels amount to less than 1 percent of Israel’s $13 billion in annual exports to the bloc’s 28 countries. But while the immediate economic impact is expected to be minimal, there is fear that the logic behind the labeling could be extended to the broader economy by targeting businesses that have operations or affiliates in the contested areas, as many do.

For example, Israeli banks that provide mortgages to homeowners in the West Bank could become vulnerable to divestment from Europe, retail chains with outlets in settlements could be barred from the Continent and manufacturers that use parts made in factories there could face labeling or sanctions.