Economy

EU steel makers brace for impact of US tarrifs

Vidya Ram London | Updated on May 31, 2018

Announces plans for retaliation

European steel makers are bracing themselves for the full force of US steel and aluminium tariffs — and a potential trade war — as a deal on exemptions for the EU, Canada and Mexico fell through ahead of a Thursday midnight deadline.

The EU has expressed its strong disappointment and announced plans for retaliatory measures.

The US was set to decide on whether to impose tariffs or grant exemptions to steel makers in Europe, Canada and Mexico by June 1, after the decision was postponed in April. The US represents a major market for EU steel producers. For Tata Steel Europe, the US accounts for 10 per cent of sales.

On Thursday, US Commerce Secretary Wilbur Ross announced the exemptions will be allowed to lapse, meaning EU steel makers exporting to the US would be faced with tariffs of 25 per cent, and aluminium producers 10 per cent. The EU believes these unilateral US tariffs are unjustified and at odds with World Trade Organisation rules. This is protectionism, pure and simple,” European Commission President Jean Claude Juncker said on Thursday.

“The US now leaves us with no choice but to proceed with a WTO dispute settlement case and with the imposition of additional duties on a number of imports from the US. We will defend the Union’s interests, in full compliance with international trade law.”

Protracted crisis

The US tariffs are expected to be particularly injurious to the European steel sector, only just recovering from a protracted crisis. Alongside the loss of high quality, value-added steel sales into the lucrative US market, the tariffs are also likely to result in part of an estimated 20 million tonnes of steel — which would have otherwise gone to the US — flooding markets elsewhere. “The steel that doesn’t go to the US has to go somewhere, and it won’t just happen equally around the world,” Gareth Stace, Director of UK Steel, told this paper ahead of the anticipated announcement. “Much of it will come to the EU because we are still very open and a liberalised trading block.”

“With some half billion dollars of steel exported from the UK to US last year, UK steel producers are going to be hit hard. This is a bad day for the steel sector, for international relations and for free trade,” he added following the US announcement.

Throughout these talks, the US has sought to use the threat of trade restrictions as leverage to obtain concessions from the EU,” said the EU Commissioner for Trade, Cecilia Malmstrom. “This is not the way we do business, and certainly not between long-standing partners, friends and allies. Now that we have clarity, the EU’s response will be proportionate and in accordance with WTO rules.”

Published on May 31, 2018

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