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Trump and Manufacturing
Thyssenkrup steel on train in Germany Copyright Lukas Schulze, Getty Images

EU Says It's Counting on Exclusion From Trump Metal Tariffs

The EU has become increasingly exasperated with Trump’s “America First” agenda.

European Union trade chief Cecilia Malmstrom vowed to press for an EU exemption from U.S. tariffs on foreign steel and aluminum when she meets her American counterpart in Brussels on Saturday.

U.S. President Donald Trump gave the green light on Thursday to the import levies on national-security grounds while sparing Canada and Mexico and giving his top trade negotiator, Robert Lighthizer, scope to work out exemptions for more countries.

“Europe is certainly not a threat to American internal security, so we expect to be excluded,” Malmstrom, the 28-nation EU’s trade commissioner, told reporters in Brussels on Friday. “We are counting on being excluded.”

The EU has become increasingly exasperated with Trump’s “America First” agenda, viewing it as a threat to the multilateral trade order that the U.S. played a leading role in building after World War II.

Two days ago, Malmstrom described the national-security argument that Trump has used to justify the 25% tariff on foreign steel and 10% levy on imported aluminum as “alarming” and “ deeply unjust.” The EU intends to hit a range of U.S. goods with punitive tariffs in retaliation should the bloc face the U.S. import taxes.

Chancellor Angela Merkel of Germany, Europe’s biggest economy and No. 1 steel exporter to the U.S., said on Friday that she was “concerned” by the American measures. Speaking in Munich, she also expressed confidence in the ability of the European Commission, the 28-nation EU’s executive arm, to react on behalf of the bloc.

In response to the steel measure, the EU is targeting 2.8 billion euros (US$3.5 billion) of imports of U.S. goods including Harley-Davidson Inc. motorcycles, Levi Strauss & Co. jeans and bourbon whiskey. In addition to such iconic brands, the American products that would face a tit-for-tat EU tariff of 25% range from steel bars and motor boats to t-shirts and orange juice.

Beyond imposing retaliatory tariffs on U.S. goods, the EU is prepared to file a case at the World Trade Organization against the Trump administration in cooperation with other countries and to introduce “safeguard” measures to prevent steel shipments from other parts of the world to America from being diverted to the European market and flooding it.

“We will go to the WTO, possibly with some other friends,” Malmstrom told a Brussels conference on Friday. “We will have to protect our industry.”

She said her March 10 meeting with Lighthizer, the U.S. trade representative, was scheduled “many months ago” to address, among other things, global steel overcapacity.

Commission Vice President Jyrki Katainen, speaking to reporters on Friday across town, played down expectations about Saturday’s talks, which will also involve Japan.

“Don’t expect everything will be solved tomorrow,” he said. “Tomorrow’s meeting is a meeting, not the meeting. We want to get as much clarity as possible.”

Special Relationship

Malmstrom warned the Trump administration against considering metal-tariff exemptions for only some EU countries such as the U.K. While long considering it has a special relationship with the U.S., Britain pledged “to work with EU partners to consider the scope for exemptions” in a statement on Friday by the Department for International Trade.

“Our presumption is that the EU is a whole body and that the U.S. will respect that,” Malmstrom said. “Otherwise that is questioning the whole EU as a project, which is quite dramatic. And our U.K. friends have been crystal clear in working on European unity.”

Robert Zoellick, who served as U.S. trade representative under President George W. Bush, told the Brussels conference that the Geneva-based WTO risks being shaken by Trump’s decision to base the steel and aluminum import levies on national-security considerations.

The White House move came after probes by U.S. Commerce Secretary Wilbur Ross under a little-used part of a Cold War-era American law. The Geneva-based WTO has never ruled on a dispute involving trade restrictions justified on national-security grounds.

“Here’s the risk: The WTO decides, well, the EU or whoever brings action is right, this isn’t really national security,” Zoellick said. “But then what happens when Wilbur Ross or somebody else says ‘wait a minute. Those people in Geneva can decide what is in America’s national security? Should we be part of the WTO?’ Or, the reverse, the WTO says ‘well, we let countries decide their own national security.’ Then you’ve created a very big loophole.”

By Jonathan Stearns

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