EU Asks for Permanent Exemption from U.S. Steel Tariffs

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529 - EU Asks for Permanent Exemption from U.S. Steel Tariffs

The White House announced on April 30 that the steel and aluminum tariff exemptions for the European Union (EU), Canada and Mexico will be extended until June 1 in order to give “a final 30 days” for them to reach agreements over trade negotiations.

In response to the announcement, the European Commission, which coordinates trade policy for the 28 EU members, acknowledged the US decision but said the bloc should be permanently exempted from the tariffs since it was not the cause of overcapacity in steel and aluminum.

The commission said the US decision to extend the bloc’s exemption from import tariffs on steel and aluminum has prolonged market uncertainty and has affected business decisions.

Related Article: US Steel and Aluminum Tariffs Meet Resistance

The well-built transatlantic relationship has further faded recently due to the deepening trade conflict between the two sides, with the United States accusing the EU for taking America’s advantage with unfair tariffs while the latter blame the former for too much protectionism and “blackmailing”.

In 2017, the EU exported $5.99 billion worth of steel products to the United States, and $1.25 billion of aluminum, making it the top exporter of steel to the United States and the fifth largest aluminum exporter.

Since U.S. President Donald Trump announced the plan to raise tariff rates in early March, the EU has been striving for a permanent exemption.

Responses of Major EU Countries

The White House’s announcement, extending the term of tariff exemptions for the moment, could give the EU a lingering pain more than a sigh of relief.

Shortly after the announcement, EU’s top three economies — Germany, France, and Britain — all voiced their demand for permanent exemption.

The British International Trade Department said in a brief statement that Britain “will continue to work closely with our EU partners and the U.S. government to achieve a permanent exemption, ensuring our important steel and aluminum industries are safeguarded.”

“We remain concerned about the impact of these tariffs on global trade and will continue to work with the EU on a multilateral solution to the global problem of overcapacity, as well as to manage the impact on domestic markets,” said the statement.

Germany, whose trade surplus has attracted criticism from Trump, said it expected a permanent exemption. “I am firmly convinced that in the interests of jobs in Germany, in Europe and in the USA, we need a long-term provision and that raising tariffs is the wrong way,” German Economy Minister Peter Altmaier said, urging more trade talks with the US.

France said it agreed there was overcapacity in the steel and aluminum industries but said the EU was not to blame and should be exempted permanently from the tariffs so the overcapacity issue could be addressed by talks.

Though the EU is temporarily exempt from the tariffs, if the exemption is not continued, its exports would be impaired significantly.

The tariffs, with an aim to erect protections for U.S. steel and aluminum producers on national security grounds, have increased frictions between the US and its trading partners worldwide and have prompted serious challenges for the economic globalization.

China has been long requesting consultations with the United States about the tariffs at the World Trade Organization, warning that unilateralism and trade protectionism pursued by the US will inevitably harm others without benefiting oneself as the global economy is deeply integrated.

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