EU presses ahead with retaliation to US steel tariffs

11 june 2018

The EU has confirmed plans to target €2.8bn of US products with extra tariffs as it prepares its retaliation against Donald Trump’s move to hit European steel and aluminium with punitive duties.

The European Commission said on Wednesday that it would apply the tariffs to a list of US goods ranging from whiskey to pleasure boats. The list was drawn up by EU trade officials this year. Brussels hopes to have the measures in place by July.

The move means the EU has in effect ignored warnings from Mr Trump that any countermeasures against his steel and aluminium tariffs would be met by further retaliation, with Brussels choosing to activate its full plan for responding to the US decision.

Under the EU retaliation plan, almost all of the dozens of US products on its hit list would face 25 per cent levies, with one — playing cards — to face a 10 per cent tariff.

Liam Fox, the UK’s trade minister, said on Monday that it was “right to seek to defend our domestic industries from both the direct and indirect impacts of these US tariffs”.

“The response must be measured and proportionate and it is important that the UK and the EU works within the boundaries of the rules-based international trading system,” he added.

Washington has applied 25 per cent tariffs to European steel exports and 10 per cent tariffs to aluminium from June 1.

The commission’s step was taken after preliminary discussions this week between senior EU government officials over how to react. EU diplomats said the talks showed broad support from capitals including Paris and Berlin, although some governments said there would need to be further studying of the details. Italy’s representative said there had not yet been time for the new government in Rome to agree its position.

Jyrki Katainen, the commission’s vice-president overseeing trade policy, said Brussels had received “full support” for pressing ahead with countermeasures. “We want to defend our industries and our legitimate interests,” he said.

The commission will send its detailed plans for review by governments, a process that is expected to take several weeks. Under EU rules, the measures will take effect unless a weighted majority of member states oppose them.

While Mr Trump has sought to justify the tariffs as a national security measure, Brussels has attacked them as “unilateral and illegal” restrictions that break World Trade Organization rules.

In parallel on Wednesday, the EU and Canada formally started dispute settlement procedures at the WTO to contest the US steel and aluminium tariffs.

EU officials on Wednesday said Brussels’ decision to target €2.8bn of annual US imports into the EU was calculated to stay firmly within retaliation rules set by the WTO. Brussels estimates that Mr Trump’s tariffs will hit more than €6bn of EU exports of steel and aluminium.

Still, Mr Katainen emphasised that Brussels wanted to avoid any further escalation or widening of the trade war, saying “there are no winners”.

“We try to convince our American partners that there is no reason to behave like this,” he said. “If you listen to congressmen from both parties or American business, they are still in the same traditional line as the United States has always been. So the problem is quite concentrated on the administration.”

EU officials said the US decision to apply tariffs meant that Europe’s offer to discuss a trade deal on industrial goods, made before Washington imposed the duties, was now off the table.

But they said that co-operation could still be pursued on other trade issues such as joint work to tackle Chinese overproduction of steel, and talks on regulatory co-operation.

Source: FINANCIAL TIMES