Sunday

17th Feb 2019

EU 'ready' for trade showdown with US

  • Juncker and Trump at loggerheads (Photo: European Commission)

The EU will immediately take counter-measures if the US imposes tariffs on European steel imports, the European Commission said on Friday (2 March).

"We will react swiftly, firmly and proportionately, on the basis of the rules that are in place, agreed by all international trade partners and the World Trade Organization," a commission spokesman told journalists.

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"We are not going to sit on our hands while our industry is at risk of being hit by unfair measures," said Alexander Winterstein, a day after the US president Donald Trump announced a 25-percent tariff on steel and 10-percent tariff on aluminum.

The comment followed statements by European Commission president Jean-Claude Juncker and EU trade commissioner Cecilia Malmstroem, on Thursday evening, promising an EU response.

Trump, who argued that the US industry was "decimated by decades of unfair trade and bad policy", overruled opposition in his own administration and assumed responsibility for triggering a global trade war.



In tweet on Friday, he said that "trade wars are good, and easy to win."

The European Commission refused to declare a trade war, but insisted on its determination to engage in a showdown with Washington.

"We're not going to use Twitter," Winterstein said. "What is important is the action we are going to take, not the words that we use."

EU trade commissioner Cecilia Malmstroem told the Financial Times that the EU would challenge the US measures at the WTO.

She said the EU was also considering imposing tariffs - through so-called safeguard measures - as well as taking retaliatory measures against US products.

'We already have a list'

"We already have a list of US products," said an EU source, adding that is covered US steel, agriculture products, and "others".

The list and the other possible measures will be discussed at the next commissioners meeting, on Wednesday (7 March).

The 'safeguard measures' could be triggered if steel that is not sold in the US because of the tariffs was to be diverted to Europe, flooding and destabilising the market.

EU's retaliation plans are "not out of the blue," the official said. "We've been preparing them since last year. They now have to be formalised."

Since the US administration opened a case on steel and aluminium imports to the US last year, the EU has said that it would be ready to reply.

The commission discussed the plans at a trade ministers meeting in Sofia earlier this week, and a meeting at technical level took place on Friday afternoon.

EU authorities however want to avoid an escalation, and are waiting for the US administration to officially publish the tariffs notification.

"The question is which decision the US intends to take," spokesman Winterstein said. "We need to go step by step."

The commission was backed by the Eurofer, the association that represents the European steel industry, which said that "Trump has chosen the most disruptive option."

"The EU must not allow that the moderate recovery in our industry over the last year is now being destroyed by the EU's most important political ally", said Eurofer director general Axel Eggert.

As EU steel exports to the US were at five million tonnes in 2017, the association said that the US tariff "could restrict US imports by up to 20-25 million tonnes overall."

AmCham, the association that represents US business in Europe, also condemned Trump's plans, saying they would "unfairly target European manufacturers."

AmCham insisted that "the root cause of the issue" was Chinese overcapacity in the sector and that tariffs would not address it.

Until US intentions are clearer, beyond Trump's messages, and until commissioners discuss the options available, it is a tightly-kept secret what the EU could do.

Consultations are ongoing with member states, Europe's partners, and business representatives. Juncker for instance will meet on Tuesday Lakshmi Mittal, the head of steel giant ArcelorMittal.

"We'll adjust to any scenario," the EU official said. "People will use all available means to avoid going down this road."

EU still divided on Chinese steel

Despite growing political pressure, trade ministers at a meeting Friday are not expected to reinforce EU trade defense against Chinese dumping.

Trump starts countdown to EU trade war

EU sales of steel to US to face 25 percent tariff from 23 March, with Europe to hit back on motorbikes and bourbon in looming trade war.

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