The European Union expects to be excluded from US steel and aluminium tariffs but will go to the World Trade Organisation to impose its own measures if Washington presses ahead, EU officials said yesterday.
US President Donald Trump set import tariffs on Thursday of 25% on steel and 10% on aluminium but exempted Canada and Mexico and offered the possibility of excluding other allies, backtracking from an earlier stance.
The EU’s trade chief Cecilia Malmstrom will meet with US Trade Representative Robert Lighthizer in Brussels today but the EU executive said the talks would not solve all the problems.
Striking a defiant tone, European Commission Vice-President Jyrki Katainen called Trump’s speech protectionist, saying it remained unclear how a potential exclusion process would work.
“To my ears it sounded very protectionist: economy without competition,” Katainen told reporters. “We have to chose whether we want rules-based trade, or whether we want the rule of force, the rule of the strongest, which we have now seen.”
EU officials said that while they shared US concerns about overcapacity in the steel sector, tariffs were not the answer, and stressed Europe’s historic ties to the United States. “We are an ally, not a threat,” Katainen said.
The officials said all EU countries, including Britain which is leaving the EU, were behind the Commission, which handles trade issues for the 28 governments.
European Commissioner Malmstrom, who co-ordinates policy for the 28-nation EU, the world’s biggest trading bloc, said she stood ready to go to the WTO, the international trade arbiter, to impose the bloc’s own safeguards within 90 days.
“We have been very clear that (the US decision) is not in compliance with the WTO,” she said. “We will have to protect our industry with rebalancing measures, safeguards.”
Safeguards are temporary tariffs.
Under WTO rules, the EU can retaliate in a proportionate manner if they do not receive compensation for new trade restrictions within 90 days. European industry associations called on Malmstrom to respond if the EU was subjected to the tariffs, saying they would hit the steel and aluminium sectors hard.
“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 Axel Eggert, head of steel association EUROFER.
Aluminium producers’ association European Aluminium called for an “immediate” implementation of measures if necessary.
Meanwhile, the new US tariffs on steel and aluminium imports took a toll on European Union steelmakers’ shares yesterday, although two of the bloc’s top players said the move by the world’s largest steel importer will have a limited impact on them. However, Germany’s steel association called on the EU, the biggest exporter of steel to the United States, to come up with effective countermeasures, warning the bloc might be forced to absorb more volumes by the move.
The EU accounted for a fifth, or $6.8bn, of US steel imports last year, the German statistics office says.
Shares in ArcelorMittal, Europe’s biggest steelmaker, were down 1.4%, while India’s Tata Steel’s shares fell 5%. The US represents around 10% of Tata Steel Europe’s sales, an industry source said.
“I’m asking for moderation. The EU is able to react decisively on the basis of WTO rules.
Now it’s about not stoking a global trade war,” Dieter Kempf, president of Germany’s BDI industry association, said. “A new wave of protectionist measures would quickly hit Germany,” he said, adding about one in of every four jobs in Germany depends on exports.
Shares in Salzgitter, Germany’s second-largest steelmaker, were down 4.3%. The group did not respond to requests for comments, but its CEO said on Thursday that markets were overestimating the impact of the tariffs on its business.
While the United States imported 36mn tonnes of steel in 2017, with Canada, Brazil and South Korea the leading suppliers, that was less than 8% of global steel market traded volumes of 473mn tonnes during the year.
And although tariffs would price some imports out of the US market, analysts at consultants Wood Mackenzie estimate that at most 18mn tonnes would be diverted to other markets — or less than 4% of annual traded volumes.
“The extent to which other sales are affected by import restrictions is being thoroughly examined,” Austrian steelmaker Voestalpine said in a statement.
“A maximum of about 3% of current Voestalpine group sales can be affected by the US tariffs and the economic risk remains very manageable even in extreme cases,” Voestalpine said, adding it expects to see further exemptions.
Thyssenkrupp, Germany’s largest steelmaker, said it supplies only 400,000-500,000 tonnes of steel a year to the US, between 3.3-4.5% of total deliveries.
Shares in Voestalpine were down 1.9%, while Thyssenkrupp’s were 0.1% lower.
Swedish steelmaker SSAB said it expected a two-fold impact from the US tariffs, with a negative impact in Europe mitigated by a positive impact in the United States.
SSAB generates most of its sales in Europe, but it is also one of the largest steel plate producers in the United States.
EU trade commissioner Cecilia Malmstrom speaks during an interview in Brussels (file). Malmstrom, who co-ordinates policy for the 28-nation EU, said she stood ready to go to the WTO to impose the bloc’s own safeguards within 90 days.
