Amid metal tariff delay, EU seeks permanent exemption
THE EUROPEAN Union says the decision by the Trump administration to grant a one-month tariff extension on EU imports of steel and aluminium is bad for business and that the bloc should be granted a permanent exemption.
The 28-nation EU said the United States’ decision “prolongs market uncertainty, which is already affecting business decisions”.
The US announcement only postpones for a month a potential trans-Atlantic trade war since the EU has already said it will retaliate if the tariffs are imposed.
“As a long-standing partner and friend of the US, we will not negotiate under threat,” the EU said, adding that a trans-Atlantic agreement “has to be balanced and mutually beneficial”.
The Trump administration said Monday it had reached an agreement with South Korea on steel imports following discussions on a revised trade agreement. The administration said it had also reached agreements in principle with Argentina, Australia and Brazil on steel and aluminium that will be finalised shortly.
“In all of these negotiations, the administration is focused on quotas that will restrain imports, prevent transshipment and protect the national security,” the White House said.
Facing a self-imposed deadline, President Donald Trump was considering whether to permanently exempt the EU and Mexico, Canada, Australia, Argentina and Brazil from tariffs of 25 per cent on imported steel and 10 per cent on imported aluminium that his administration imposed in March. The White House had given itself until the end of Monday to decide whether to extend the exemptions.
The EU has taken a tough stance, raising the prospect of a trade war if the US does not back down. It has a list of retaliatory tariffs worth about US$3.5 billion on imports from the US that it will activate if the EU loses its exemption.
Germany said it continues to expect a permanent exemption. The EU’s largest steel exporter to the US, it accounted for about five per cent of US steel imports last year.
“Neither the EU nor the US can have an interest in an escalation of their trade tensions,” a spokeswoman for Chancellor Angela Merkel said Tuesday in a statement.
European financial officials have cited the trade tensions created by the US tariffs proposal as a risk to the economy.
Some surveys suggest a downtick in business and consumer confidence, though it’s unclear how big an impact the trade tensions are having. While experts say the immediate potential damage from the aluminium and steel tariffs is limited, the danger is of a tit-for-tat escalation in which both sides slap more duties on each other’s goods.
“The imposition of tariffs might signal that the two regions are heading towards a more serious trade conflict,”said Stephen Brown, European economist at Capital Economics.
Trump says he wants to protect American metal producers from unfair competition and bolster national security. But the tariffs’ announcement in March, 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 EU, Mexico, Canada, Australia, Argentina and Brazil — from the tariffs.
That meant the steel tariff covered just 30 per cent of all imports, according to Oxford Economics. If all the exemptions were ended, it would have deepened the impact of the tariffs on American companies that use steel and potentially affect financial markets. Stock prices fell nearly two per cent when the tariffs were announced.
CONSIDERING EXTENSION
Two people familiar with the process said the Trump administration had 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. The officials spoke only on condition of anonymity to describe internal deliberations.
The EU and others had 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 aluminium, and how they would support the US before international bodies like the World Trade Organization. Security relationships with the US have also been part of the criteria.