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With tariffs in effect, Europe strikes back

June 1, 2018

The European Union and Canada have challenged the US steel and aluminum tariffs at the World Trade Organization. Canada and Mexico have also announced retaliatory tariffs on billions of dollars worth of US goods.

This picture taken on January 17, 2018 shows a Chinese worker cutting steel in Qingdao in China's eastern Shandong province
Image: AFP/Getty Images

Europe plans its next move

The US introduced a 25-percent tariff on steel and a 10-percent tariff on aluminum from the EU, Canada and Mexico on Friday, sparking furious reactions from those countries' leaders who had been hoping for an exemption from the measures.

The EU and Canada have filed complaints at the World Trade Organization (WTO) in response, and the EU has also vowed to hit back with retaliatory tariffs on an array of US products.

'Trade conflict'

  • EU Trade Commissioner Cecilia Malmstrom said the US decision has damaged trans-Atlantic relations and rejected a US offer to continue negotiations while the tariffs were in place. "For the moment that door is closed," she said.
  • Canadian Foreign Minister Chrystia Freeland said the US had imposed the tariffs under a "false pretext of safeguarding US national security" and added that "Canada will closely collaborate with the European Union" on challenging the tariffs at the WTO.
  • German Finance Minister Olaf Scholz condemned Washington's move, saying: "This one-sided decision is wrong and in my view against international law."
  • French Finance Minister Bruno Le Maire warned of the consequences, saying: "It's entirely up to US authorities whether they want to enter into a trade conflict with their biggest partner, Europe."
  • French President Emmanuel Macron recalled the pre-World War II period, saying: "Economic nationalism leads to war. This is exactly what happened in the 1930s."
Infographic showing shares of world steel exports

No last-minute deal: Many officials in the EU were banking on a last-minute breakthrough deal that would have either extended exemptions to the tariffs, which were first introduced for global steel and aluminum imports in late April, or introduced a permanent exclusion from the tariffs.

Read more: Opinion: US import tariffs — nerves of steel, round two

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What will the EU do? The EU, which has sole control over trade policy for all 28 EU member states, has formally complained about the US tariffs at the WTO. The complaint initiates a long legal process that could take more than a year to complete. In the short term, the EU has also threatened to enact retaliatory tariffs against US products from areas of the country that voted heavily for US President Donald Trump, including Harley Davidson motorcycles and bourbon whiskey.

US hopes talks will continue: US Treasury Secretary Wilbur Ross had said he hoped the US could continue trade negotiations with the EU, Canada and Mexico despite the tariffs. "We look forward to continued negotiations ... because there are other issues that we also need to get resolved," he said.

What is Canada doing? Canada said it would impose tariffs on C$16.6 billion ($12.8 billion/€11 billion) worth of US imports, including whiskey, orange juice, steel, aluminum and other products. It has also filed its own complaint about the US tariffs at the WTO.

What is Mexico doing? Mexico said it would retaliate with "equivalent" measures against US products, including pork legs, apples, grapes, cheese, steel and other goods.

What happens next? The EU will discuss its list of potential retaliatory tariffs with its 28 member states before deciding on whether to enact them. The EU Commission, the bloc's executive, said the measures could enter into force on June 20 at the earliest. Canada's tariffs will enter into force on July 1.

amp, ls/cmk (Reuters, AP, AFP, dpa)

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