New tariffs imposed by the Trump administration on steel and aluminium from the European Union (EU) are illegal and not a matter of US national security, according to the UK’s International Trade Secretary Liam Fox.

The US announced that starting on June 1 it will impose additional duties of 25% and 10% respectively on imports of steel and aluminium from the EU.

President Trump originally imposed the tariffs in March, claiming that if the US continued to rely on imported steel and aluminium, it would threaten the countries national security and damage its own metal industry.

President Trump initially delayed imposing the steel and aluminium tariffs on the EU and other allies to allow time for negotiations, but with the exemption ending at midnight on May 31 the additional duties were applied from June 1.

The recent tariffs have been described as illegal by the UK’s International Trade Secretary, Liam Fox, who aired the UK’s grievances and their continued stance to seek exemptions from the tariffs during a recent appearance on BBC Radio 4’s Today programme.

“We will still be making that case throughout this week,” he said.

“The United States believes, I believe wrongly and illegally, that this is a national security matter for the US,

“Given that we export some pretty complex steel products to the United States which are part of their national security programmes themselves, this reasoning that is given  is wrong and therefore we believe unlawful.”

 

EU response

Dr Fox’s comments follow those of the President of the European Commission, Jean-Claude Juncker, who raised his own concerns about the tariffs.

“I am concerned by this decision,” he said.

“The EU believes these unilateral US tariffs are unjustified and at odds with World Trade Organisation rules,

“This  is protectionism, pure and simple.”

Juncker identified overcapacity as the problem raised by the US tariffs, not the EU itself.

“Over the past months we have continuously engaged with the US at all possible levels to jointly address the problem of overcapacity in the steel sector,” he said.

“Overcapacity remains at the heart of the problem and the EU is not the source of but on the contrary equally hurt by it,

“That is why we are determined to work towards structural solutions together with our partners.”

The EU president made it clear they would not negotiate under the threat of tariffs.

“We have consistently indicated our openness to discussing ways to improve bilateral trade relations with the US but have made it clear that the EU will not negotiate under threat,” he said.

“By targeting those who are not responsible for overcapacities, the US is playing into the hands of those who are responsible for the problem,

“The US now leaves us with no choice but to proceed with a WTO dispute settlement case and with the imposition of additional duties on a number of imports from the US,

“We will defend the Union’s interests, in full compliance with international trade law.”

EU Commissioner for Trade, Cecilia Malmstrom, also expressed her opposition towards the new tariffs and signified impending legal action in reaction to the new measures.

“Today is a bad day for world trade,” she said.

“We did everything to avoid this outcome,

“I have argued for the EU and the US to engage in a positive transatlantic trade agenda, and for the EU to be fully, permanently and unconditionally exempted from these tariffs,

“Throughout these talks, the US has sought to use the threat of trade restrictions as leverage to obtain concessions from the EU,

“This is not the way we do business, and certainly not between longstanding partners, friends and allies,

“Now that we have clarity, the EU’s response will be proportionate and in accordance with WTO rules,

“We will now trigger a dispute settlement case at the WTO, since these US measures clearly go against agreed international rules.”

 

Retaliatory tariffs

The US measures in regards to the recent tariffs affect EU exports worth €6.4b in 2017.

The US measures are primarily intended to protect the US domestic industry from import competition, which is clearly at odds with World Trade Organisation (WTO) rules.

In response to the US tariffs, the EU has targeted a number of US products as part of its own retaliatory tariffs to be applied which will reflect the damage caused by the new US trade restrictions on EU products.

The EU has drawn up a list of 100 US goods worth €2.8b ($3.5b US) which are set to be targeted under the EU’s retaliatory tariffs.

The targeted goods include bourbon, cosmetics, Florida orange juice, jeans, and Harley Davidson motorcycles.

The list of products was created after consultation with European stakeholders and supported by Member States.

 

Impact on UK steel

The new tariffs are set to have a negative impact on a UK steel industry which according to UK Steel – the body which represents steel produces across the UK – 7% of steel exports go to the US – worth £360m.

UK Steel Director, Gareth Stace, said his worst fears about the tariffs had been realised.

“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,” he said.

“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, June 1), unfortunately our pessimism was justified and we will now see damage not only to the UK steel sector, but also the US economy.”