The US has sanctioned two Turkish ministries and three senior government officials in response to the country's military offensive in northern Syria.
President Donald Trump also phoned his Turkish counterpart Recep Tayyip Erdogan to demand an immediate truce, Vice-President Mike Pence said.
Mr Pence said he would travel to the region "as quickly as possible".
Syria's army earlier entered areas in the north-east. This could result in a confrontation with Turkish-led forces.
The Syrian army deployment followed a deal with Kurdish-led forces, who until last week were US allies.
Turkey says its offensive aims to push Kurdish forces from the border region and establish what the government in Ankara describes as a "safe zone".
With a "safe zone" reaching about 30km into Syria, Turkey wants to resettle up to two million Syrian refugees currently on its territory.
Many of them are not Kurds and critics warn this could lead to ethnic cleansing of the local Kurdish population.
Speaking to reporters in Washington DC today, US Treasury Secretary Steven Mnuchin described the sanctions as "very strong", which would have a severe impact on the Turkish economy.
The US Treasury published a statement, which said that action was taken "against two [Turkish] ministries and three senior Turkish government officials in response to Turkey's military operations in Syria".
"The Turkish government's actions are endangering innocent civilians, and destabilizing the region, including undermining the campaign to defeat ISIS [Islamic State]," the statement added.
Appearing alongside Mr Mnuchin, Vice-President Pence warned that the sanctions "will continue and will worsen unless and until Turkey embraces an immediate ceasefire, stops the violence and agrees to negotiate a long-term settlement of the issues along the border between Turkey and Syria".
Mr Pence said that President Trump reiterated this in Monday's phone call with President Erdogan.
The vice-president also reiterated that the US "did not give a green light to Turkey to invade Syria".
The US earlier said that the Turkish "unacceptable" incursion into Syria has resulted in the release of many captured IS fighters.
EU Arms export suspension
Earlier on Monday, European Union countries committed to suspending arms exports to Turkey but stopped short of an EU-wide arms embargo.
In response, Turkey said it would examine its co-operation with the EU due to its "unlawful and biased" attitude.
Syrian state media said Russian-backed government forces had entered the strategic town of Manbij, inside the area where Turkey wants to create a "safe zone".
Turkish troops and their allied Syrian militias were gathering near the town.
The deal with Kurdish-led forces was seen as a boost for Syrian President Bashar al-Assad as his troops would return to north-eastern areas for the first time since 2012, when their withdrawal to fight rebels elsewhere allowed Kurdish militias to take control.
Despite disagreeing with their attempts at self-rule, Mr Assad did not seek to retake the territory, especially after the Kurds became partners in the coalition against IS with US troops on the ground.
Kurds served their purpose
Apart from fighting IS, the Kurds were fundamental for the US in limiting the influence of rivals Russia and Iran and keeping some leverage on the ground.
For now, Syrian forces will not be deployed between Tal Abyad and Ras al-Ain, where Turkey has focused its efforts. Kurdish-led officials insisted they would remain in charge politically, and retain order in the area.
The Russian government, said it did not want to entertain the possibility of a clash between Russian and Turkish forces in Syria, and said it was in regular contact with Turkey's authorities.
Up to 160,000 civilians had been displaced, according to UN humanitarian agency OCHA, which said the number was expected to rise.
At least 50 civilians have been killed inside Syria and another 18 over the border in southern Turkey, reports say. Kurdish forces have confirmed the deaths of 56 of their fighters while Turkey says four of its soldiers and 16 pro-Turkish Syrian fighters have been killed in Syria.
Last week, US President Donald Trump abruptly pulled dozens of US troops from pockets in the north-east of Syria after a phone call with Mr Erdogan.
The move effectively paved the way for the operation by Turkey, which views elements of the Kurdish groups in Syria as an extension of the banned Kurdistan Workers' Party, which has fought for Kurdish autonomy in Turkey for three decades.
Winston Peters voices concerns
Meanwhile, New Zealand Foreign Affairs Minister Winston Peters said there were serious concerns for peace and stability in north-east Syria.
"Recent reports that hundreds of ISIS-affiliated families have fled from a camp are deeply concerning from a humanitarian and security perspective.
"While we acknowledge Turkey's domestic security concerns, Turkey's cross-border actions risk harming civilian populations, causing further instability and exacerbating humanitarian needs", he said.
Mr Peters said Turkey's actions also undermined hard-fought for gains made in the fight against ISIS.
"Despite the loss of territory once held by ISIS, the group remains a threat and there are real risks that ISIS may take advantage of the Turkish offensive to re-establish itself in Syria", he said.
Mr Peters said New Zealand was urging all parties to exercise restraint and to find a political solution.
He said MFAT had raised these concerns directly with the Turkish ambassador.
-BBC and RNZ