As EUROPE went to press on Thursday 8 March, the EU was in limbo, awaiting US President Donald Trump's enactment of customs duties on imports of steel and aluminium into the USA. At the start of the day, Trump seemed to be showing signs of flexibility on these taxes as regards countries that are "real friends" of the USA – but he did not name them.
"We have to protect and build our steel and aluminium industries while at the same time showing great flexibility and cooperation toward those that are real friends and treat us fairly on both trade and the military", Trump had tweeted before a meeting with the sector's management in Washington in the early afternoon.
White House spokesperson Sarah Sanders had said on Wednesday that there could be "exemptions" to the customs duties of 25% on steel and 10% on aluminium. The duties have been promised by Trump and are motivated by reasons of national security under Section 232 of the 1962 Trade Expansion Act (see EUROPE 11973).
Sanders had hinted that these exemptions would be for Canada, which is the USA's top supplier of steel, and Mexico – both countries being partners of the USA in the North American Free Trade Agreement (NAFTA), which is currently being renegotiated. Sanders had furthermore hinted that the exemption could also be "for other countries potentially".
According to the Washington Post, which quotes senior figures in the US administration, Canada and Mexico could benefit from an exemption from these taxes for a month, which could be prolonged in case of progress in the NAFTA renegotiations.
On Wednesday, US Treasury Secretary Steven Mnuchin said that "exemptions" were being considered and that the US administration was "negotiating deals" on a case-by-case basis. US Commerce Secretary Wilbur Ross meanwhile gave assurances that the decision on the taxes was carefully considered and that Washington was not seeking a trade war.
At the US Congress, where there is concern about the consequences for US companies of the planned taxes, around a hundred Republicans elected to the Chamber of Representatives called on Trump not to impose uniform taxes, but more targeted ones. Trump was also called on for moderation in his trade policy by his adviser, Gary Cohn – who announced his resignation on Tuesday.
On the European side, Commission Vice-President for Jobs, Growth, Investment and Competitiveness Jyrki Katainen warned on Thursday that trade wars had "no winner". He added that "the United States had lost hundreds of thousands of jobs" when President George W. Bush had imposed taxes on steel imports in 2002.
On Wednesday, European Trade Commissioner Cecilia Malmström had set out the three actions being considered by the EU in response to the US taxes. These three actions include rebalancing measures (a hushed way of saying retaliation measures) in the form of customs duties 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 market for steel and aluminium affected by the US restrictions (see EUROPE 11976).
On Thursday, the Commission was hoping for a frank dialogue with the US side on the measures the institution was planning against the possible US taxes. It hoped the dialogue would take place when US Trade Representative Robert Lightzier visits Brussels on Saturday 10 March as part the tripartite meetings with Malmström and Japan's Economy Minister Hiroshige Seko (which were committed to on the sidelines of the WTO ministerial conference in Buenos Aires in December 2017 – see EUROPE 11924).
On the side of the European Central Bank (ECB), its president Mario Draghi underlined the risks, on Thursday, of "growing protectionism" for growth in the eurozone (see other article).
On Wednesday, the managing director of the International Monetary Fund, Christine Lagarde, said a trade war was to be feared for world growth.
Visiting Brussels on Thursday, the chief executive officer of the World Bank, Kristalina Georgieva meanwhile advised the USA to have a carefully calibrated approach compared with the consequences for world trade. (Original version in French by Emmanuel Hagry)