EU seeks dialogue with US over ‘protectionist’ tariffs

Brussels – The European Union hopes to secure an exemption from US tariffs on steel and aluminium imports, top officials said Friday, while European Commission Vice President Jyrki Katainen accused US President Donald Trump of protectionism.

Trump signed proclamations Thursday imposing import tariffs of 25 per cent on steel and 10 per cent on aluminium products, invoking a rarely used US law authorizing presidential action against imports that undermine national security.

Global wave of condemnation

The EU has vowed to retaliate if it is hit with tariffs, raising the spectre of a trade war.

“But talks must be the preference right now. The best would be if we are exempt,” German Chancellor Angela Merkel said following a meeting of industry leaders in the EU’s largest economy.

The US tariffs, which have triggered a global wave of condemnation, are expected to dominate a long-planned meeting on Saturday between EU Trade Commissioner Cecilia Malmstrom, US Trade Representative Robert Lighthizer and their Japanese counterpart Hiroshige Seko.

The EU will seek further clarity on the tariffs, Malmstrom said, noting that it was “not crystal clear” what Trump had decided. The measures are due to come into effect in two weeks’ time.

“We are counting on being excluded,” the commissioner said at a forum organized by the German Marshall Fund think tank. The EU is an ally of the United States and “cannot possibly be a threat to national security,” she added.

No justification for tariffs

Katainen later argued that European manufacturers had not done anything that could justify tariffs under WTO rules. The World Trade Organization allows tariffs against countries whose industries are exporting goods at artificially low prices.

“Our companies have not dumped steel or aluminium on the US market, so this cannot be used as an excuse to set up higher tariffs,” Katainen said.

“My personal view, when I read the speech of President Trump, when he was talking about economic security, to my ears it sounds very protectionist – economy without competition,” he added.

If the EU is hit with tariffs, it will be ready to retaliate within 90 days as prescribed by the World Trade Organization, Malmstrom said.

EU threatens possible countermeasures

During this time, the commission would consult with member states and industry representatives.

The 28-country EU has already threatened possible countermeasures. A list prepared by the commission includes around 200 imports from the US worth an overall value of around 2.8 billion euros (3.45 billion dollars) in 2017.

The list, seen by dpa, includes goods such as bourbon, peanut butter, cranberries and orange juice – hitting US swing states – as well as steel, textile and industrial products. It would require the final approval of EU capitals.

Member states have so far shown “very strong support” for the commission’s approach, Malmstrom said.

But Germany could be a moderating force, with leading politicians and economists warning that a trade war would be in nobody’s interest.

The European Steel Association (EUROFER) backed the call for countermeasures, expressing fears that US import tariffs could lead to a “large and sudden” diversion of goods intended for the US market to Europe.

“The loss of exports to the US, combined with an expected massive import surge in the EU could cost tens of thousands of jobs in the EU steel industry and related sectors,” said EUROFER chief Axel Eggert.

Fiery reaction from China

The decision also provoked a fiery reaction from China, where a top commerce official decried it as a “wanton attack” on the global trade system, while Foreign Minister Wang Yi said Beijing would administer “the necessary and justified response.”

Trump first announced plans a week ago for global import tariffs on steel and aluminium products, drawing international condemnation as well as domestic criticism from his own Republican Party ranks.

Canada and Mexico are initially exempt from the tariffs amid ongoing talks to revise the 1994 North American Free Trade Agreement (NAFTA).

Other countries can argue for case-by-case exemptions, Trump said.