President Donald Trump could plunge the U.S. into a trade fight with Europe. Trump has already done this with China with a series of proposed new tariffs on Chinese imports. But U.S. steel and aluminum tariffs are the center of attention at the moment. The president is racing against a self-imposed deadline to decide whether to permanently exempt the European Union and other six US allies from the tariffs or not.
The steel and aluminum tariffs were imposed by the White House last month. The president also placed temporary exemptions for EU countries and other allies. The exemptions, however, were supposed to be temporary and the Trump has until Monday to decide whether they will be renewed or not.
The European Union has already made it clear that it will retaliate if it loses the exemption. The Union said that similar tariffs on U.S. imported goods into the EU will be implemented. According to the White House, the tariffs on imported steel and aluminum are designed to protect the American metal industry. However, the decision has come under harsh criticism from Democrats and a few Republicans who see it as too much of a gamble. U.S. financial markets have also reacted negatively to the tariffs.
The White House has imposed a 25% tariff on all steel imports into the US and a 10% tariff on aluminum. People who are close to current negotiations at the White House have told reporters that the Trump administration is debating on whether to add a temporary extension to the current exemption. This would allow for more time in order to find a permanent solution to this issue.
The EU has been asked to spell out the acceptable limits on steel exports to the US. Washington is also using the tariffs to negotiate for support in trade bodies like the WTO and security cooperation in the future. South Korea, a major steel exporter to the US was the very first country to accept a limit of steel exports as part of renewed bilateral discussions with the Trump administration. The Asian country was later granted permanent exemption from the tariffs.
Other countries like Japan, China, and Russia have yet to get any exemptions and the feeling at the moment is that over time these countries will reduce steel shipments to the US. There will, of course, be a vacuum that needs to be filled and the White House hopes that this vacuum will be filled by local metal producers.
US Secretary of Commerce Wilbur Ross said that the EU needs to accept import quotas. This will prevent European steel from filling up the gap left by tariffs on other countries. The EU is watching closely how events will unfold in the coming days. The Union has already drafted a series of retaliatory tariffs that are worth about $3.5 billion. European leaders have resisted any attempt to impose quotas on their steel to the US. There’s no doubt that a trade fight would affect US-EU relations.
