As yet you do not have a barracks or an armoury, which once you encounter them on the timeline you will be able to build and then produce an army that will be able to attack and fight for you to win the encounter.
You also have yet to reach the Trader so you are unable to trade for the goods you need in order to negotiate..again this will be available in time.
Unfortunatley for now you need to be patient and produce the steel that you require and then you will be able to negotiate for the encounter.
You may be producing goods slowly at the moment but in time you will get a 'boost' for one of the 3 goods that you are able to be produce. Once you get that you should aim to mass produce this item and then once you have the Trader you will be able to trade with your neighbours for the goods you need more of.
In the meantime it is a good idea to have a least one of each goods building (planks, steel & marble) producing something.
The game has been set up so that as you produce one boosted good, your neighbours will have a different good boosted...the problem at this stage is if your neighbours are smaller than you or completely inactive then they will not have anything to trade...hence again a good idea to keep producing some of each for your own needs.
I hope this helps