US pushes ahead with 232 tariffs against EU, Canada and Mexico

From midnight tonight (1 June) the USA will push ahead with 25% tariffs on imported steel from its key allies – namely the European Union, Mexico and Canada. The news hasn't gone down well with the UK or the European Union.

On hearing the news, European Commission president Jean-Claude Juncker said it was a bad day for world trade, while the UK is said to be deeply disappointed. Bruno Le Maire, the French finance minister said it was unjustified and dangerous. Strong words indeed and likely to lead to a tit-for-tat trade war of the sort the Americans have been trying so hard to avoid with the Chinese, although the recent hold on tariffs for the Chinese do not include the Section 232 tariffs announced in March.

But, as they say, it's not over until the fat lady sings, or, perhaps, it's not over until its over. Commerce Secretary Wilbur Ross, who, funnily enough, was in Paris when he announced the sanctions, seemed to leave room for negotiation when he commented: "We continue to be quite willing and indeed eager to have discussions with all those parties," he said.

However, it looks as if the EU won't take it laying down. Le Maire said that all necessary measures would be taken if tariffs were imposed.

Commenting on the confirmation of 25% tariffs on steel exports from the EU to the US, UK Steel director, 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.

“Throughout, we have urged the UK and EU authorities to do all they practically can to steer us away from this outcome, showing President Trump that we are not the problem here. But it is evident that even with the extra time provided by the temporary exemptions, common ground has not yet been found and plain common sense has not prevailed. Any US calls for the EU to voluntarily place hard limits on its exports of steel were completely unjustified, against WTO rules and run counter to central tenets of free-trade. It is only right that they have been rebuffed by European Commissioner, Cecilia Malmström.  

“It is difficult to see what good can come of these tariffs, US steel consumers are already reporting price increases and supply chain disruption and with some half a billion dollars of steel exported from the UK to the US last year, UK steel producers are going to be hit hard. As stated time and time again, the only sustainable solution to the root cause of the issue, global overcapacity in steel production, is multilateral discussions and action through established international channels.

“Even with the imposition of tariffs, it is vital that the EU and US continue discussions to find a way through the current impasse and reach an agreement that works for all parties. At the same time, it is only correct that the EU forges ahead with safeguard action, to shield against diverted trade swamping the European market, as well as its challenge to the US tariffs through the WTO.

“This is a bad day for the steel sector, for international relations and for free trade," Stace concluded.