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It will also bar current or former Ethiopian or Eritrean government officials it deems responsible for the crisis.
Secretary of State Antony Blinken said in a statement the U.S. actions were to press for a resolution of the crisis.
The parties involved “have taken no meaningful steps to end hostilities or pursue a peaceful resolution of the political crisis,” he said.
Redwan Hussein, head of the Ethiopian government’s taskforce on Tigray, said the government would issue a statement soon. Eritrea’s Information Minister Yemane Gebremeskel did not return calls and messages seeking comment.
Thousands have been killed and about 2 million people forced from their homes in Tigray after conflict erupted between the Tigray People’s Liberation Front (TPLF) and the Ethiopian military last November.
Troops from the neighbouring region of Amhara and the nation of Eritrea entered the war to support the government.
Residents say Ethiopian troops and their allies have killed civilians and committed gang rapes. Ethiopia said on Friday it had put soldiers on trial for killing civilians and rape, although the court records were not yet public.
Both Eritrea aand Ethiopia spent months denying Eritrean soldiers were in Tigray before acknowledging their presence and promising they would withdraw.
Blinken said the United States would continue humanitarian assistance and certain other critical aid to Ethiopia and would continue existing broad restrictions on assistance to Eritrea.
The Ethiopian government has come under increasing pressure from the international community to demonstrate accountability as reports of atrocities in Tigray mount. The European Union has suspended budget support payments amid reports of gang rapes, mass killings of civilians and widespread looting in the northern region.
Blinken said the United States called on the Ethiopian government to meet commitments to hold accountable all those responsible for rights violations and abuses, to protect civilians, and to ensure unhindered humanitarian access.
Further U.S. actions were possible, he said.
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