EU will strike back against Trump’s threatened tariffs
BRUSSELS―The EU will Wednesday set out plans to strike back against US President Donald Trump’s threatened steel and aluminum tariffs, with the flagship US products such as jeans, motorbikes and whiskey in the cross-hairs.
The blow by Brussels will land hours after Trump’s trade offensive brought the resignation of his top economic advisor Gary Cohn, an influential ex-Goldman Sachs banker who fiercely opposed the measures.
No official decision by the EU is expected as Trump has yet to sign into effect his plan to set tariffs for what he calls unfair competition for US industry, but French President Emmanuel Macron has demanded Europe be ready to act swiftly if he does.
European Commission chief Jean-Claude Juncker on Friday threatened to hit big-name US brands such as Harley Davidson motorbikes, Levi’s jeans and bourbon whiskey with import duties.
This prompted Trump to fire back a threat to tax cars from the EU, further fueling fears of a full-blown transatlantic trade war erupting.
“We are looking at possibilities to retaliate, meaning that we will also put taxes or tariffs on US imports to the European Union,” EU trade commissioner Cecilia Malmstrom told the BBC on Monday.
Despite Juncker’s headline-grabbing threat to iconic US brands, the hit list the EU is working on does not mention specific businesses, using instead the dry language of customs regulations.
Malmstrom said the EU was also looking at “safeguard” measures to protect its industry―restricting the bloc’s imports of steel and aluminum to stop foreign supplies flooding the European market, which is allowed under World Trade Organization rules.
Trump, elected on a promise to roll back the effects of globalization on the US economy with an “America First” platform, said Thursday he planned to impose 25 percent tariffs on steel imports and 10 percent on aluminum.
Juncker, who on Wednesday met Lakshmi Mittal, the boss of the world’s top steelmaker ArcelorMittal, said last week the EU would “react firmly” to protect European industry.
Europe exports around five billion euros’ ($4 billion) worth of steel and a billion euros’ worth of aluminium to the US each year, and the commission estimates Trump’s tariffs could cost some 2.8 billion euros.
As well as making it harder for European metal to find buyers in the US, tariffs could also mean other foreign producers redirect their output to the EU, pushing the market there down.
The first option envisaged by Brussels consists of “rebalancing” measures to compensate the value of the damage suffered, which it says would be in line with WTO rules.
This would mean taxing certain specific US products to send a political message to Trump―possibly targeting businesses located in states favorable to the president. It would take around three months for these measures to come into effect.
Brussels wants to maximize the political impact of its reprisals on the US while minimizing the impact of a trade war on European consumers.
European Commission Vice President Jyrki Katainen told AFP on Friday the bloc could form a “coalition of like-minded countries” to file a complaint at the WTO, though this procedure usually takes around two years.