The EU is ready to respond to the USA setting up customs duties against imports of steel and aluminium, but it hopes that the measure announced by US President Donald Trump will not be applied, European Trade Commissioner Cecilia Malmström stated on Wednesday 7 March, after presenting the Commission with the measures being considered by her staff which have already been discussed with the member states. The measures involve retaliation that could hit €2.8 billion of US goods.
"We still hope, as a USA security partner, that the EU would be excluded. We also hope to convince the US administration that this is not the right move", Malmström stated, repeating that the EU wanted "to avoid any trade escalation".
On the grounds of national security under Section 232 of the 1962 Trade Expansion Act, Trump announced on 1 March that at the end of the week he would enact customs duties of 25% against imports of steel and of 10% against imports of aluminium, but he did not specify the countries to be targeted (see EUROPE 11973).
On Wednesday, White House spokesperson Sarah Sanders said that the US administration would still table an announcement at the end of the week.
"We have made clear that if a move like this is taken, it will hurt the European Union. It will put thousands of European jobs in jeopardy and it has to be met by firm and proportionate response. Unlike these proposed US duties, our three tracks of work are in line with our obligations in the WTO. They will be carried out by the book", Malmström stated.
The European Commission is planning on three actions: an appeal at the WTO against the USA and in cooperation with other countries affected by the US measures; 'rebalancing' measures compatible with WTO rules; and safeguard measures, if steel products from third countries that are intended for export to the USA are redirected to the EU.
The 'rebalancing' measures (a hushed way of speaking about retaliation measures) could be effective within 90 days following the adoption of American measures. For this, the Commission is planning on duties of 25% being set on US products (for a third of steel products, a third of agricultural products and a third of other products) worth €2.8 billion – the equivalent of the share of the European steel and aluminium market affected by the US restrictions.
"Some types of bourbon are part of this, as are other articles like peanut butter, cranberries and orange juice", Malmström stated.
The day after Trump's announcement, European Commission President Jean-Claude Juncker said the list would include "Bourbon whisky, Harley-Davidson motor bikes and Levi's jeans".
The EU is thus targeting very popular brands and products manufactured in states where voters are more favourable to Trump – like Kentucky, where Bourbon whisky is produced, Wisconsin, where Harley-Davidson is based, and Florida which produces orange juice.
However, in practice, the list of products targeted does not mention companies, but is based on a more general customs nomenclature of products.
"The root cause of the problem in the steel and aluminium sector is global overcapacity. It is rooted in the fact that a lot of steel and aluminium production takes place under massive state subsidies, and under non-market conditions. This can only be addressed by cooperation, getting to the source of the problem and working together", Malmström insisted.
During Swedish Prime Minister Stefan Löfven's visit to Washington on Tuesday, Trump told press that in relation to the EU and its planned measures: "they can do whatever they'd like, but if they do that, then we put a big tax of 25 % on their cars, and believe me, they won't be doing it very long". "The EU has not treated us well, and it's been a very, very unfair trade situation", he added.
Contrary to what Trump says, "trade wars are bad and easy to lose", European Council President Donald Tusk warned on Wednesday, calling on politicians on both sides of the Atlantic "to act responsibly". Tusk wants this issue included on the agenda of the next European Council on 22 and 23 March. (Original version in French by Emmanuel Hagry)