Wednesday

16th Jan 2019

Trade war feared as EU to retaliate on US steel

  • German steel procures among those likely to suffer (Photo: Daniel Mennerich)

US plans to impose steel and aluminium tariffs risk prompting a wider trade war after the EU, China, and others vowed to retaliate.

"We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk," European Commission head Jean-Claude Juncker said on Thursday (1 March).

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • Trump said tariffs needed on national security grounds, because US steel firms supplied military contractors (Photo: whitehouse.gov)

He said the EU would "react firmly" in "the next few days" with "countermeasures" that were compatible with World Trade Organisation rules.

He also indicated that US president Donald Trump's "blatant … protectionism" risked doing wider harm to transatlantic relations.

"The EU has been a close security ally of the US for decades," Juncker noted, after Trump ignored proposals by his own trade chief to exclude "friendly states" from the metals decision.

Trump said, earlier on Thursday, that steel importers would have to pay a 25 percent tariff and aluminium importers 10 percent after the measures entered into life next week.

Germany is the EU's biggest steel exporter to the US and shipped 1.4 million tonnes there last year.

That figure is small compared to Canada and Brazil, which shipped around 5 million tonnes each to the US.

But VW Stahl, the German steel lobby, said Trump's move threatened to flood the EU market with foreign steel when those countries diverted exports from the US.

"If the EU does not act, our steel industry will pay the bill for protectionism in the US. Europe is threatened by trade diversion by a new steel spill, in a situation where the import crisis in the EU market is far from over," VW Stahl chief Hans Juergen Kerkhoff said, referring to global overcapacity in the sector.

With Canada, Brazil, and other steel exporters, such as China, also threatening retaliatory measures, Kerkhoff added that the risk of a broader trade war risked seeing EU exporters shut out of other markets as well.

"German supplies to other countries would also be affected, as the US measures would have imitation effects and thus an increase in global protectionism," he said.

He spoke after Canadian foreign minister Chrystia Freeland said "Canada will take responsive measures to defend its trade interests and workers".

The US measures "overturn the international trade order," Wen Xianjun, vice chairman of the China Nonferrous Metals Industry Association, said, adding: "Other countries, including China, will [also] take relevant retaliatory measures."

The Chinese reaction is expected to target US exports of soy beans as well as metals, highlighting the risk of a wider protectionist backlash around the world.

The Trump tariffs raise "risks of an all-out trade war, which could dampen economic growth," the Australia & New Zealand Banking Group said in a note.

Trump made the announcement at a meeting with a dozen or so CEOs of US steel makers, including US Steel Corp and Arcelor Mittal, which stand to gain from his decision.

But the resulting hike in raw materials costs for US steel-using industries, such as energy companies, car makers, and the aerospace and construction sectors, which employ 80 times as many people as US steel makers, risked undoing any benefits for the American economy.

"We are urging the administration to avoid killing US jobs through a steel tariff that impacts pipelines," said Andy Black, CEO of the Association of Oil Pipe Lines, a US pressure group.

The situation was quickly reflected on Wall Street, where shares in US steel firms rose by 7 percent on Thursday, while those in steel-users such as Ford, Caterpillar, and Boeing fell by 3 percent.

Shares in steel firms in China, Japan, and South Korea also fell on the news.

Opinion

Steel overcapacity crisis - from Europe to China

While the debate has escalated about China’s steel overcapacity, it is not exactly new. The first postwar steel crisis occurred in the US and Europe. Beijing seeks to avoid a deja vu of bad policies.

Russian steel firm mauls EU officials

One of Russia’s top steel firms has launched a fierce, personal and multi-pronged attack on the EU commission in a bid to overturn anti-dumping penalties.

EU 'ready' for trade showdown with US

The EU will immediately take countermeasures if the US imposes tariffs on European steel imports, the European Commission said.

News in Brief

  1. Spanish PM calls for EU gender equality strategy
  2. Farage says bigger Brexit majority if second referendum
  3. Macron starts 'grand debate' tour after yellow vests protests
  4. Barnier: up to London to take Brexit forward
  5. Stimulus still needed, ECB's Draghi says in final report
  6. May's Brexit deal defeated by 230 votes
  7. German economy hit by global economic turbulence
  8. MEPs narrowly call for end to 'tampon tax'

Stakeholders' Highlights

  1. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  2. Nordic Council of MinistersSeminar on disability and user involvement
  3. Nordic Council of MinistersInternational appetite for Nordic food policies
  4. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  5. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  6. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”
  7. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  8. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  9. Nordic Council of MinistersState of the Nordic Region presented in Brussels
  10. Nordic Council of MinistersThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  11. Nordic Council of MinistersThe Nordic gender effect goes international
  12. Nordic Council of MinistersPaula Lehtomaki from Finland elected as the Council's first female Secretary General

Latest News

  1. German spies to monitor far-right AfD party
  2. On Morocco, will the EU ignore its own court?
  3. UK parliament rejects May's Brexit deal in historic defeat
  4. EU suggests majority vote on digital tax by 2025
  5. MEPs redouble appeal on sexual harassment
  6. Trump's wall vs Europe's sea
  7. Centre-right MEPs want transparency vote to be secret
  8. Germany scorns 'unusual' US threat on Russia pipeline

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic design sets the stage at COP24, running a competition for sustainable chairs
  2. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  3. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  4. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  5. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  6. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  7. International Partnership for Human RightsCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  8. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  9. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  10. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  11. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  12. Mission of China to the EUChina: Work Together for a Better Globalisation

Join EUobserver

Support quality EU news

Join us