The United States has escalated its trade war with the European Community by notifying the European authorities it will go ahead with a plan to subsidize a large shipment of surplus dairy products to Egypt.

Sources said that Egypt has agreed to pay the world market price--whichs about half of the domestic American price--for 18,000 metric tons of butter and 6,000 metric tons of cheese, ited States through its support-price program.

Egypt will pay $39.6 million in Egyptian pounds, which the U.S. can spend only in Egypt. "They're geal bargain," an American official said.

The sale, which follows a subsidized shipment of one million metricr to Egypt earlier this year, is designed to show, once again, American displeasure with the Common Market's f Normally, Egypt is a big buyer of dairy products from the Common Market, and the avowed attention of the Unit punish the Community by cutting into its business with that country.

A series of talks between the American and European sides seeking ways to soften the dispute over farm subsidies has produced little result. Secretary of Agr John Block was reported to be disappointed with the progress of the talks, and authorized tough action to show American determination.

H an American official, who said, "I would know if anything else is planned," gave firm assurance that no other of subsidized agricultural products are being planned.

A Department of Agriculture spokesman, confirming t butter and cheese to Egypt, acknowledged that the idea is to persuade the Europeans to reduce their agricultudies. "If necessary, we are prepared to defend our markets," he said.

"The basic thrust is that we have a sroducts and we'd like to get rid of some, if we can do it without hurting anyone," the spokesman said, conceding thats would probably claim they are being hurt.

Both the Common Market and the United States support their farmuring them of minimum prices far above actual world market prices. The major difference is that the United States for the most part puts its huge surpluses into storage, while the ans try to get rid of their farm excesses by export subsidies.

Common Market officials here, who said the Ussed word along over the weekend that the dairy sale to Egypt would be consummated, had no comment, pending ansels they said would be available today.