Daily Management Review

US-EU Trade War May Begin After US Slaps Steel Tariff On Europe


US-EU Trade War May Begin After US Slaps Steel Tariff On Europe
The U.S. has announced imposition of tariffs on steel and aluminum imported from the EU which has set the stage for as full-blown trade war between Washington and Brussels.
Following the announcement by the US commerce secretary, Wilbur Ross, that a 25% duty on steel and a 10% duty on aluminium would be payable by EU companies starting midnight on Thursday, swift retaliation to the move was promised by the president of the European commission, Jean-Claude Juncker.
The Trump administration had granted temporary relief to the EU, Mexico and Canada from the tariffs that were announced about two months ago.
The lifting of the waiver was announced by Ross because, according to him, not sufficient development had been made in deliberations with three of the US’s traditional allies towards reducing the trade deficit of America.
An immediate response was triggered from Brussels by the move that coincides with threats from Trump of protectionist action against China.
While terming the U.S. measure to be “unjustified”, Juncker said that there was no choice left with the EU but to strike back with tariffs against U.S. goods along with a trade case with the World Trade Organization in Geneva.
“We will defend the Union’s interests, in full compliance with international trade law,” he added. Levi’s jeans, Harley Davidson motorbikes and bourbon whiskey would be targeted by the EU, Brussels had already announced.
Britain was alarmed at Ross’s announcement even as the country is hopeful of striking a trade liberalization deal with the US following completion of Brexit.
“We are deeply disappointed that the US has decided to apply tariffs to steel and aluminium imports from the EU on national security grounds,” a government spokesman said. 
“The UK and other European Union countries are close allies of the US and should be permanently and fully exempted from the American measures on steel and aluminium.”
The director of UK Steel, Gareth Stace, said: “President Trump had already loaded the gun and today, we now know that the US administration has unfortunately fired it and potentially started a damaging trade war.
“Since President Trump stated his plans to impose blanket tariffs on steel imports almost three months ago, the UK steel sector had hoped for the best, but still feared the worst. With the expiration of the EU exemption now confirmed to take effect tomorrow [Friday, 1 June], unfortunately our pessimism was justified and we will now see damage not only to the UK steel sector, but also the US economy.”
However, the EU should not overreact to the U.S. move, warned the CBI. “The president’s measures are deeply concerning for firms in the UK, for close trading partners and across supply chains”, said Ben Digby, international director at the employers’ organization.
“There are no winners in a trade war, which will damage prosperity on both sides of the Atlantic. These tariffs could lead to a protectionist domino effect, damaging firms, employees and consumers in the US, UK and many other trading partners. Now is not the time for any disproportionate escalation, and we urge the EU to consider this when initiating its response.”
“Europe does not want a trade conflict. We believe in a fair trade regime from which everybody benefits,” said Manfred Weber, the leader of the European People’s party, the largest group in the European parliament.