United States is risking trade fight with Europe as sanctions delay expires
WASHINGTON » The Trump administration risks igniting a trade battle with Europe just as it’s preparing for tense trade talks in China this week.
Facing a self-imposed deadline, Trump is considering whether to permanently exempt the European Union and five other countries from tariffs that his administration imposed last month on imported steel and aluminum. The White House provided temporary exemptions in March and has until the end of Monday to decide whether to extend them.
If it loses its exemption, the EU has said it will retaliate with its own tariffs on U.S. goods imported to Europe.
The confrontation stems from the president’s decision in March to slap tariffs of 25 percent on imported steel and 10 percent on imported aluminum. Trump justified the action by saying it was needed to protect American metal producers from unfair competition and bolster national security. But the announcement, which followed an intense internal White House debate, triggered harsh criticism from Democrats and some Republicans and roiled financial markets.
At the time, Trump excluded several vital trading partners — the European Union, Mexico, Canada, Australia, Argentina and Brazil — from the tariffs.
That meant the steel tariff covered just 30 percent of all imports, according to Oxford Economics. If all the exemptions were ended, it would deepen the impact of the tariffs on American companies that use steel and potentially affect financial markets. Stock prices fell nearly 2 percent when the tariffs were announced.
Two people familiar with the process said the Trump administration has been considering whether to provide a short-term extension of the exemptions to allow for more time to review the countries’ efforts to secure permanent exemptions.
One of the officials said the U.S. trade representative has been overseeing the process for all of the countries except for the European Union, whose tariffs are being evaluated by the Commerce Department.
The officials spoke on condition of anonymity to describe internal deliberations.
The EU and other countries have been asked to spell out what limits they could accept on the amount of steel they export to the United States, how they would address the issue of excess production of steel and aluminum and how they would support the U.S. before international bodies like the World Trade Organization. Security relationships with the U.S. have also been part of the criteria.
South Korea agreed to limit its exports to the United States as part of broader discussions involved in updating its bilateral trade agreement with the U.S. and was granted a permanent exemption.
China, Japan and Russia haven’t received exemptions from the duties. That will likely reduce steel shipments from those countries over time. Commerce Secretary Wilbur Ross said late Friday that quotas on imports from Europe and other countries are necessary so imports from those countries don’t simply replace Chinese imports. The goal of the tariffs is to reduce total steel imports and boost U.S. production, Ross said.