The European Union (EU) estimates that the first wave of Donald Trump’s steel and aluminium tariffs will hit as much as 28 billion euros (S$39 billion) of the bloc’s exports in what would be a massive escalation in the US president’s trade war.
The amount of goods – which the EU assesses will include derivative products as well – would be about four times larger than the last time Trump targeted the bloc’s metals sector, according to people familiar with the EU’s thinking.
EU trade chief Maros Sefcovic debriefed the bloc’s ambassadors on Friday (Feb 21) after his visit to Washington to meet his US counterparts. He cautioned that the situation is in flux and the details and the scope of any tariffs could still change, said the people, who spoke on the condition of anonymity.
As part of his effort to rewrite global trade rules, Trump announced a series of duties including 25 per cent tariffs on steel and aluminium exports that could take effect as soon as Mar 12. He’s also announced reciprocal tariffs based on policies of partners that are seen as obstacles to US trade.
The European Commission, which has authority over EU trade actions, declined to comment.
For the EU, the fight over American metals tariffs started in 2018 during Trump’s first term, when the US hit nearly US$7 billion of European steel and aluminium exports with duties, citing national security concerns. At the time, officials in Brussels scoffed at the notion that the EU posed such a threat.
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In that first salvo, the US hit steel goods with 25 per cent tariffs and aluminium with 10 per cent, and included exemptions for certain products. Bloomberg reported earlier that this time around, no exemptions were planned.
The 27-nation bloc retaliated by targeting politically sensitive companies with retaliatory duties, including Harley-Davidson Inc. motorcycles and Levi Strauss & Co jeans. The measures were applied product-by-product and included agricultural goods and apparel in addition to steel and aluminium products.
The two sides agreed to a temporary truce in 2021, when the US partly removed its measures and introduced a set of tariff-rate quotas above which duties on the metals are applied, while the EU froze all of its restrictive measures.
The EU has said that it would respond quickly and proportionally to US tariffs and could reactivate as a first step the lists previously suspended. The commission has been preparing various lists with different sectors and goods targeted with the principle of causing more harm on the American side, including in sensitive constituencies, Bloomberg previously reported.
The commission has said that unfreezing the suspended tariffs, which are on pause until the end of March, could be done quickly.
Sefcovic, who met US Commerce Secretary Howard Lutnick, Jamieson Greer, his pick for US trade representative and National Economic Council Director Kevin Hassett in the last week, told EU envoys that the atmosphere was positive but no negotiations were conducted yet, said the people.
Sefcovic said he used the meeting as a first point of contact to open the channels of communication and to try to debunk claims by the Americans that he said were false, including that Europe’s value added tax is unfair to the US, they said.
In order to avoid a trade clash, Sefcovic offered his American counterparts a deal to lower tariffs on industrial goods, including cars, one of Trump’s longstanding demands. BLOOMBERG
