The announcement of import tariffs on steel and aluminum by U.S. in the month of Mar’18 on the grounds of national security has strained the country’s relations with a majority of nations across the globe. While the two economies China and U.S. are seeking ways to mend their relations via trade talks, the rift between U.S. and EU (European Union) seems to be widening.
U.S. to impose quota on EU steel imports
After the announcement of import tariffs, the Trump government had announced temporary exemption to six of its trade allies including EU till 1 Jun’18 pending on the outcome of the talks. However, following two months of discussions and EU’s proposals to open its markets wider to U.S. products including cars, in an effort to seek ‘permanent exemptions’ from these trade restrictions appear not to have persuaded Washington to lift the threat of import tariffs on EU steel and aluminum.
As per the market sources, the White House is considering trade measures to restrict EU’s steel and aluminium exports to U.S. by 10% and subsequently country’s government has proposed two options for the same; a quota to be fixed at 90% of U.S. imports from the EU bloc in 2017 or a tariff-rate quota that would target the same 10% reduction via levies.
European Union is one of the largest sources of U.S. steel imports. The 28-nation bloc exported 5.3 MnT of steel to the U.S. in 2017, second only to Canada. In dollar terms, it was the largest source of U.S. steel imports last year at a value of USD 6.6 billion (5.3 billion euros) and EU’s aluminum exports to U.S. stood at 1.1 billion euros in 2017.
European Union’s counterattack on the U.S.
While on one hand U.S. has proposed quotas for EU imports, the European Union has also hinted to impose retaliatory 25% tariffs on carbon and alloy flat and long steel as well as aluminium imports from U.S. starting from 20 Jun’18, the decision of which will be taken after the approval from WTO (World Trade Organisation).
In this trade dispute between the two countries, the EU steel industry is likely to be affected more than that of U.S. This is because EU’s steel exports to U.S. stands to be higher than what U.S. exports to European Union. As per Eurofer data, in 2017 EU exported 3.2 MnT of carbon steel to the U.S, while EU imported just 101,160 tonnes of carbon steel from the U.S.
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