US opposes Israeli tax freeze on Palestinians
The US says it is opposed to a move by Israel to halt the transfer of tax revenues to the Palestinian Authority.
Israel took the step in retaliation for the Palestinian bid to join the International Criminal Court (ICC).
Israeli officials said on Saturday that $127m (£82m) collected on behalf of the Palestinian Authority last month would be held back.
US State Department spokeswoman Jen Psaki said the Israeli move would raise tensions.
"We call on both sides to avoid action that raises tensions and makes it difficult to return to direct negotiations. Obviously this action would qualify in that category," she said.
She also said the US was "deeply troubled by the Palestinian action".
Ms Psaki said joining the ICC was "entirely counterproductive and does nothing to further the aspirations of the Palestinian people for a sovereign and independent state".
She reiterated warnings that the Palestinian move could have "implications" for US aid to the Palestinian Authority.
"The focus right now is to continue to encourage both sides," she said.
Joining the ICC could see Palestinians pursue Israel on war-crimes charges.
Israel collects taxes on behalf of the Palestinians and transfers about $100m per month. It accounts for two-thirds of the authority's budget.
Israel froze the monthly transfers in April 2014 after Palestinian leader Mahmoud Abbas applied to join a series of international treaties and conventions.
Last Wednesday, Mr Abbas signed the Rome Statute, the ICC's founding treaty.
Under the terms of the statute, it will take about 60 days for the Palestinians to join the ICC after they file the documents.
Neither Israel nor the US is a member of the ICC.
Based in The Hague, the ICC can prosecute individuals accused of genocide, crimes against humanity and war crimes committed since 1 July 2002, when the Rome Statute came into force.