A raft of top European companies will be forced to pull out of the Nord Stream 2 gas pipeline project with Russia or face crippling sanctions under draconian legislation racing through the US Congress.

Berlin and Brussels have threatened retaliation if Washington presses ahead with penalties on anything like the suggested terms, marking a dramatic escalation in the simmering trans-Atlantic showdown over America’s extra-territorial police powers.

A consortium of Shell, Engie, Wintershall, Uniper, and Austria’s OMV is providing half the €9.5bn (£8.5bn) funding for the 760-mile pipeline through the Baltic Sea to Germany. “This is a spectacular interference in internal European affairs,” said Isabelle Kocher, the director-general of Engie in France.

The wording of the US legislation is so broad that it could sweep up dozens of firms in different ways. “The measures could impact a potentially large number of European companies doing legitimate business,” said the European Commission.