European leaders have declared a “bad day for world trade” after the US announced it will impose tariffs on metal imports from the EU.
The EU has twice been given temporary exemptions to the steel and aluminium tariffs – 25 and 10 per cent respectively – put in place by US President Donald Trump in March.
But the US Commerce Secretary Wilber Ross announced today that the tariffs will apply to the EU – as well as Canada and Mexico – from midnight.
European Commission President Jean-Claude Juncker only discovered the news when he was passed a note during a speech he was making in Brussels.
“This is a bad day for world trade,” he said in response.
Some €6.4bn worth of EU exports are expected to be affected by the US tariffs.
UK Steel has warned that they will have a “profound and detrimental effect” on business.
British manufacturers sold 350,00 tonnes of steel to the US last year, which made up 7% of their exports.
Despite the EU’s reticence to enter a trade war, Juncker said the decision could not go “without any kind of reaction.”
“What they can do, we’re able to do exactly the same,” he said.
The Commission has drawn up a list of 322 US products on which it will raise duties from next month.
Jeans, bourbon whiskey, peanut butter and motorbikes are among iconic US products that will be hit by EU countermeasures worth €2.8bn.
The Commission will also immediately begin a dispute settlement with the World Trade Organisation.
Susan Danger, CEO of the American Chambers of Commerce to the EU, said she is “very concerned by the damage a tit-for-tat dispute would cause to the transatlantic economy and its impact on jobs, investment and security across the Atlantic.”
Ross said the US administration remained open for negotiations with the EU, saying “there are other issues that we also need to get resolved.”
That will be interpreted as another push for the EU to settle the metal tariffs dispute through a new overarching trade deal with the US.
But EU Trade Commissioner Cecilia Malmstrom has repeatedly refused to “negotiate under threat” and reiterated the position today, saying: “That is not the way we do business.”
The tariffs were introduced by the US President in response to the markets being flooded by cheap Chinese steel which has endangered the competitiveness of the industry in the West.
The EU has stressed that its industry has also been damaged and offered to work with the US to find a multilateral solution through the World Trade Organisation.
“By targeting those who are not responsible for over capacities, the US is playing into the hands of those who are responsible for the problem,” said Juncker.