EU plots swift retaliation against Trump’s 25% tariff on our steel
As President threatens 25% tariff on steel imports into US…
EU chiefs are preparing a “swift, firm and decisive” response to Donald Trump’s threats of a 25% steel tariff.
A retaliation will be hammered out by Commissioners when they meet in Brussels tomorrow.
Labour MP Anna Turley, secretary of Parliament’s cross-party steel group, said it was “essential the EU, with support from the UK, respond in a robust and appropriate manner...” Theresa May told Mr Trump of her “deep concern” at tariffs on UK steel.
But Labour MP Chuka Umunna, of the Open Britain campaign, said: “This shows Trump means it when he says ‘America First’ – there will be no special favours for Britain. Yet the backers of a hard Brexit, from Theresa May down, pin their hopes on Trump.” No10 said it was still confident of fixing a US trade pact but Mr Trump insisted last night he was not backing down over tariffs. Labour leader Jeremy Corbyn said last night that Mrs May was a “hostage” to her own Cabinet on Brexit and there had been “20 wasted months” since the Leave referendum.
Donald Trump’s threatened steel tax risks lighting the touch paper on a global trade and tariff war. The US President’s vow to slap 25% duties on steel imports, and 10% on aluminium, has triggered an immediate response.
China says it will “not sit idly by”. The EU promises “proportionate” taxes on £2.5billion of US imports and US’s neighbour Canada, which has the most to lose, warns it would retaliate.
Mr Trump has confidently declared “trade wars are good, and easy to win”.
But Nobel-prize winning economist Robert Shiller struck a warning note. He called Mr Trump’s declaration the “first shot in a war and that’s what is worrisome. That’s what happened in the Great Depression.”
The President’s announcement came out of the blue, ahead of a meeting with the US steel industry, but was aimed squarely at his core supporters.
His Twitter messages were peppered with vows to “Make America Great Again” and “America First”.
But while he is gung-ho about a trade conflict, history and experts fear it will be ordinary people who will suffer most.
Prices would rise on all sides, hitting consumers hard in the pocket. This means they could buy less, trade suffers and a global economic depression is the ultimate outcome.
A number of firms have already warned tariffs will push up the cost of steel, which will be passed on.
Ford, General Motors and Campbell’s Soup rely on imports to make their goods as the US does not make enough steel. They have warned tariffs may force them to raise prices. But critics believe they may be bluffing and would take a hit to profits rather than lose sales. The EU is drawing up a list of US-made goods, from steel and agriculture to clothing, to target with retaliatory measures.
A “proportionate” 25% tariff could add £21 to Levi jeans, £6.25 to Jack Daniel’s whiskey, £9, 750 to a Jeep Grand Cherokee, £2,500 to a Harley-Davidson motorbike and 75p to 500g of Sun-Maid raisins. Jean-Claude Juncker, President of the European Commission, said: “We cannot simply put our head in the sand.”
Mr Trump ramped-up the rhetoric by warning the US could impose stiff tariffs on European car makers. That could hit British car plants as exports of UK-made vehicles to the US jumped 7% last year, with 210,000 cars sold there.
The US was the second biggest export market after the EU in 2017.
Talk of a steel tax comes hot on the heels of the US approving controversial tariffs on imported washing machines and solar panels. The move was billed as protecting US manufacturers from foreign competition. A steel levy would threaten some of America’s closest allies, including Canada, South Korea and Germany. China does not rank in the top 10 biggest steel exporters to the States. Any hope of the UK steel industry being given special treatment appears to have been abandoned. About 15% of the industry exports were to the US, worth about £360million a year.
We have 31,300 steel workers, many of them in deprived areas of South Wales and the North East. Unions say the plan would risk jobs on both sides of the Atlantic.
Mr Trump’s snub also raises doubts that we can rely on the US for a free trade deal post-Brexit.
But there are question marks over whether the trade war at the scale threatened will happen.
Mr Trump may think twice if working-class US families are hit. It may be blocked. A US trade commission rejected attempts to add 300% tariffs on imports of aircraft by Canadian firm Bombardier after a row with arch rival Boeing.
It is possible the dispute will be settled by the World Trade Organisation. But the timing of Mr Trump’s threat is also interesting, coming partway through a bid to rewrite a trade deal with Canada and Mexico. He is using his country’s £13trillion economy as a battering ram to try to get what he wants. Will others call his bluff ?