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Germany: little hope for US tariffs exemptions

April 26, 2018

Berlin holds little hope that the EU will be granted a further exemption from US metals tariffs beyond a May 1 deadline. Washington has demanded concessions in the auto industry to drop the tariffs.


The German news agency DPA reported on Thursday that the upcoming meeting between Chancellor Angela Merkel and US President Donald Trump — scheduled for the weekend — was unlikely to win the EU a further exemption from higher steel and aluminum tariffs planned by Washington.

Citing government sources, DPA said the Trump administration's plans to impose a 25 percent tariff on steel and 10 percent on aluminum imports to the United States would likely come into effect on May 1.

The tariffs, which were first announced in March with temporary carve-outs for some countries, are part of a push by Donald Trump to tighten access to the US market for politically sensitive imports. Trump also said they were intended to bring countries to the negotiating table to address what he sees as unfair imbalances in trade.

Possible concessions

A senior White House advisor later said the US would be willing to exempt the EU in exchange for ongoing trade concessions. 

"It's very important that some of our friends make some concessions with respect to trading practices, tariffs and taxes," National Economic Council Director Larry Kudlow told US broadcaster CNBC.

Kudlow pointed to the auto sector as one area where there could be a deal.

"One of the issues cropping up is the equal treatment of automobiles. We'd like to see some concessions from Europe," Kudlow said, adding that details were still under consideration.

EU warnings

The EU's top trade official has warned, however, that the 28-nation bloc would not enter talks on easing commercial tension until Washington dropped any threat to hit Europe with punitive measures.

War on steel: Donald Trump's tariff plan

In April, EU Trade Commissioner Cecilia Malmstrom said she had "not started to negotiate anything" with the US and would not do so until an "unconditional and permanent" exemption to the tariffs was granted.

"We are under no circumstances negotiating anything under pressure, under threat," she said.

Trump's decision has exasperated Brussels, which has threatened retaliation if Europe is hit by the measures, and is preparing to challenge them at the World Trade Organization (WTO).

Read more: US trade groups warn against higher tariffs

While being in close contact with US Commerce Secretary Wilbur Ross in recent weeks, Malmstrom rejected the idea that Europe would offer any concessions in exchange for a further reprieve.

"We have not offered the US anything, we are not going to offer them anything to get exemptions from tariffs that we consider are not in compliance with the WTO," she told reporters in Strasbourg on April 10.

Industry calls for pressure

The Federation of German Industries (BDI) on Thursday called for Merkel to exert pressure on Trump regarding the tariffs during their upcoming meeting.

"Chancellor Merkel should demand that US President Trump abandon completely the import restrictions on steel and aluminium," BDI chief Dieter Kempf told DPA. "She should spell out to him what risks there are as a result of these US measures not just for the world economy and global trade, but also for the US economy: attacks on free trade endanger prosperity and jobs on both sides of the Atlantic."

EU coordinating response

Meanwhile, Brussels is coordinating its approach to the US tariffs threat and has started surveillance of steel and aluminum imports into the EU, which have surged in recent weeks.

The data collected on the quantity and value of incoming metals will help the bloc determine whether it needs measures to limit imports.

Read more: Soybean, aircraft and cars: Which US states will suffer most?

In addition, Brussels is planning counter-measures against worsening trade relations with Washington, including higher EU tariffs on US orange juice, tobacco, bourbon whiskey and Harley-Davidson motorbikes.

German Economics Minister Peter Altmaier said Wednesday that EU member states were still coordinating their response, with a detailed plan expected to be ready by the middle of next week.

Read more: Opinion: Free trade needs smart solutions

Altmaier also noted that the bloc's members felt a responsibility to prevent an escalation in the trade dispute with the US and a race toward "uncontrollable proliferation" of trade tariffs.

Game of Trade - who's playing against who?

aw, uhe/aos (dpa, Reuters, AFP)

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