EU targets 26 billion euros of US products in tariff retaliation
The EU will also hit products from its previous trade fight with Trump such as boats, bourbon and motorbikes
[STRASBOURG] The European Union launched countermeasures on Wednesday (Mar 12) against new US metals tariffs, with plans to impose its own duties on 26 billion euros (S$37.8 billion) worth of American goods.
The announcement came hours after the US administration imposed 25 per cent tariffs on steel and aluminium imports in a massive escalation of the trade war between two longstanding allies. The EU will immediately begin consultations with member states, with adoption of the tariffs due in mid-April.
“The countermeasures we take today are strong yet proportionate,” European Commission President Ursula von der Leyen told reporters at a briefing in Strasbourg. “We firmly believe that in a world fraught with geo-economic and political uncertainties, it is not in our common interest to burden our economies with such tariffs.”
European stock futures rose early Wednesday as traders reacted to progress towards a ceasefire in the war in Ukraine. The euro was down about 0.3 per cent after three days of gains.
For Europe, the new levies will be nearly four times the size of similar duties imposed during Trump’s first term, when the US targeted nearly US$7 billion of the bloc’s metals exports, citing national security concerns. The EU will target US steel and aluminium products as well as textiles, agricultural products and home appliances.
The EU will also hit products from its previous trade fight with Trump such as boats, bourbon and motorbikes, according to the statement.
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In addition, Trump has announced reciprocal tariffs coming in early April based on policies of partners that are seen as obstacles to US trade, including Europe’s value-added tax, and has targeted certain goods including European cars.
The EU’s trade chief, Maros Sefcovic, travelled to Washington last month to try to find an amicable solution with senior members of the Trump team including US Commerce Secretary Howard Lutnick. He offered to lower tariffs on industrial goods, including cars, one of Trump’s longstanding demands, and increasing US imports of liquefied natural gas and defence goods.
“The disruption caused by tariffs is avoidable if the US administration accepts our extended hand and works with us to strike a deal,” Sefcovic said Wednesday. “We are ready to negotiate.”
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Brussels said earlier that it would retaliate on any US move swiftly and proportionately and has been working for months on various lists of goods to hit, including politically sensitive products from certain US constituencies that would inflict more economic pain on the US side than the European economy.
In the European steel market, producers are bracing for a two-fold impact, with European exports to the US set to fall, and the region’s imports set to rise as metal is re-routed away from the US.
“We can indeed expect the EU market – already saturated with cheap steel imports from Asia, North Africa and the Middle East – to be further flooded as steel intended for the US market is redirected because of the new tariffs,” a spokesperson for industry lobby group Eurofer said.
During the first Trump presidency, for every three tonnes of steel deflected from the US market because of tariffs, two tonnes went to the EU, the spokesperson said.
Aluminium producers are also bracing for a surge in imports, particularly from Canada, which typically supplies more than half of the aluminium that the US imports.
For the EU, the fight over American metals tariffs started in 2018 during Trump’s first term, when the US hit steel and aluminium exports with duties, citing national security concerns. At the time, officials in Brussels scoffed at the notion that the EU posed such a threat.
The 27-nation bloc retaliated by targeting politically sensitive companies with retaliatory duties, including Harley-Davidson motorcycles and Levi Strauss . jeans.
The two sides agreed to a temporary truce in 2021, when the US partly removed its measures and introduced a set of tariff-rate quotas above which duties on the metals are applied, while the EU froze all of its restrictive measures.
All suspended metals tariffs are due to be reintroduced in full, including some levies that have never previously been in force. As a first step, all suspended EU tariffs on about US$8 billion of US products are set to snap back into place at the end of March. BLOOMBERG
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