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17th Nov 2018

EU to hit US juices and peanut butter over steel tariffs

  • Trade commissioner Cecilia Malmstroem said American bourbon will be also on the EU's tariff list (Photo: European Commission)

The EU is planning to impose tariffs on orange juice, bourbon, peanut butter and cranberries among other items if the US goes ahead with the levies on steel and aluminium announced last week by US president Donald Trump.

The EU will also challenge the US move at the World Trade Organisation (WTO), while preparing so-called safeguard measures in case there is a surge in steel imports coming into the bloc.

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Trade commissioner Cecilia Malmstroem told reporters on Wednesday (7 March) that the EU is still hoping a trade war with the US can be avoided.

"A trade war has no winners and if it does not happen [that is] for the better, then we can work with our American friends and other allies on the core issue of this problem - overcapacity," Malmstrom said.

"But if it does happen we will have to take measures to protect European jobs," the Swedish commissioner added, saying she hopes the EU will be excluded from the new US tariffs.

Malmstroem said that no decisions have been taken yet, and the list of goods the EU is planning to hit with a tariff in response to a possible US decision is still provisional, and will be published in the next days.

The EU thinks the American actions are "economic safeguard measures in disguise", and the EU has the right to "rebalance" under WTO rules, she said.

The bloc would need at least two months to enact the measures. They also need to be announced to the WTO. Malmstroem said the commission's legal services were working to make sure everything is "by the book", and WTO-compatible.

She also pledged that the EU's response would be proportionate and balanced.

"We are eager not to escalate this … but we can't remain silent," Malmstroem said, adding that the new tariffs would mean a severe blow to the EU economy.

Unjust justification

The trade chief also said the EU has "serious doubts" about the justification of the US move, which cites national security threats for imposing the planned 25 percent tariff on steel, and 10 percent tariff on aluminium imports.

"We cannot see how the EU, friends and allies in NATO, can be a threat to the national security of the US. We find this assumption deeply unjust," Malmstroem said, adding the US's justification is probably not compatible with WTO rules.

Malmstroem did not name countries the EU is coordinating with to take the case to the WTO, but said that can happen as soon as the legal analysis is concluded.

"We believe have a very strong case," she told reporters.

Malmstroem said the American tariffs "would be damaging to the transatlantic relations, but potentially also to global rules-based trading system" and will put "thousands of European jobs at risk".

She also extended an olive branch to Washington by pointing – in a veiled fashion – to China, suggesting that instead of fighting a global trade war, the US and the EU should work together to deal with distortions caused by Chinese steel overcapacity.

"The root cause of the problem is global overcapacity … A lot of steel and aluminium production takes place under massive state subsidies and under non-market conditions, this can be addressed by working together," she said, adding: "Turning inward is not the answer."

European Council president Donald Tusk meanwhile called on EU leaders to discuss trade at their summit at the end of March, with the objective of keeping world trade "alive".

Rebuking Donald Trump's earlier comments that trade wars are good and easy to win, Tusk said: "The truth is quite the opposite, trade wars are bad and easy to lose", and called on politicians on both sides of the Atlantic to act responsibly.

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.

EU insists on US tariffs exemption

Europe is "an ally, not a threat", the EU Commission says - as the US is poised to impose duties in steel and aluminium. Common action on Chinese steel overcapacity could help diffuse the crisis.

Sofia summit: EU leaders search for a Trump strategy

"With friends like that, who needs enemies?" European Council Donald Tusk asked on Wednesday, as EU leaders were trying to come up with a reply to the US president's questioning of the transatlantic relationship.

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