EU announces countermeasures against US tariffs but wants to avoid trade war

Wednesday, 07 March 2018 16:27
President Trump’s announcement last week on imposing tariffs on imports of steel and aluminum has prompted EU to plan countermeasures to protect its economic interests.
At a press conference today, trade commissioner Cecilia Malmström outlined measures that EU will implement if the US would impose the tariffs.

EU is the second largest producer of steel in the world after China and reportedly accounts for 14 % of US´s total imports. Thousands of jobs in the EU may be affected, according to Malmström.

“There are indications that the tariffs will be set at 25 % on steel and 10 % on aluminum,” she said. “We have raised our concerns on numerous occasions and hope that EU will be excluded but if not we are working on three tracks.”

The US has justified the tariffs on grounds of national security but Malmström doubted that it was the real reason and found it unfair. US military requirements represent no more than 3% of US production.

The first step the EU would take, after consultation with legal experts, is to file a complaint with the World Trade Organization (WTO). This can be done very quickly, according to Malmström, who stressed that EU is following the rule book.

Donald Tusk, President of the European Council commented from Luxemburg on the matter saying that 'trade wars are "bad and easy to lose"' in response to Donald Trump's repeatedly saying that these trade wars are "good and easy to win".

Second, EU would consider WTO-compatible safeguard measures to protect its own steel and aluminum industry in case other countries affected by the American tariffs would try to divert its exports to EU.

“The root cause of problems in these two sectors is global overcapacity caused by non-market based production and state subsidies,” Malmström said, “but this can only be addressed at the source and by working with the key countries involved”.

EU’s third track would be imposing tariffs on the import of US products. A provisional list is being prepared and will be published soon after consultation with all EU member states.

The list includes a mix of agricultural and industrial products, where there are alternatives to imports from the US, and not only as previously announced specific American brands such as jeans, bourbon and motorcycles which might hit Trump’s core constituencies.

“We aren’t eager to escalate,” Malmström said and described the EU tariffs as a measured “rebalancing” which will offset the potential damage caused to EU exports.

Trump obviously regards trade as a zero-sum game and has stated that he isn’t afraid of a trade war. Malmström countered today that “Protectionism cannot be the answer. We still hope that we can avoid a trade war where all will lose.”

The Brussels Times
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