Brussels, Belgium, Jun 1 – The EU fired its first riposte against Washington’s punishing steel and aluminium tariffs on Friday, joining Canada and Mexico in a brewing global trade war against US protectionism.
Brussels followed its major allies into battle against the US after President Donald Trump delivered on his “America First” promises and slapped duties of 25 percent on imports of steel and 10 percent on aluminium.
The affront from Europe’s closest ally builds on earlier transgressions to transatlantic ties including Trump’s dumping of the Paris climate accord as well as the nuclear deal with Iran.
The EU on Friday said it had opened legal challenges to the United States at the World Trade Organization (WTO), the Geneva-based arbitrator of international trade disputes that is loathed by Trump.
The bloc also opened proceedings against China, the world’s second biggest economy, in a case involving intellectual property, in an effort to not single out the US, the EU said.
“If players in the world don’t stick to the rule book, the system might collapse. That is why we are challenging the US and China at the WTO,” EU Trade Commissioner Cecilia Malmstrom told a news briefing in Brussels.
Brussels is also preparing to slap tariffs on US products including bourbon, motorcycles and blue jeans worth up to 2.8 billion euros ($3.3 billion).
– Tariff ‘affront’ –
The US decided the tariffs in March, but gave Canada and the EU — the biggest sources of foreign aluminum and steel for the US — a grace period that ended on May 31.
Trump’s decision drew a string of furious responses from Canadian President Justin Trudeau, German Chancellor Angela Merkel and French President Emmanuel Macron.
“These tariffs are an affront to the long-standing security partnership between Canada and the United States,” said Trudeau, as Ottawa hit back with retaliatory duties on US imports worth up to Can$16.6 billion (US$12.8 billion).
Washington’s move also left European leaders fuming.
French President Macron told Trump in a telephone call that the tariffs were “illegal” and said Europe would respond in a “firm and proportionate manner”.
And speaking to reporters, Macron described the US move as “a mistake in many ways because it responds to existing international imbalances in the worst way — by breaking up and creating economic nationalism.
“And nationalism is war. That’s exactly what happened in the 30s,” Macron said.
In Berlin, Chancellor Merkel said the measure “risks touching off spirals of escalation that in the end hurt everyone”.
Mexico, too, said it would impose retaliatory duties on a variety of US goods, including steel and a host of agricultural goods, including pork, apples and cheese.
The unprecedented trade tensions are souring a gathering of the so-called Group of Seven or G7 under way in the coastal mountain resort of Whistler, Canada, normally a scene of compromise and trade promotion.
“I’ll be stating very clearly our disagreement with the actions they’ve taken,” Canadian Finance Minister Bill Morneau told reporters ahead of the meetings.
“I have every expectation that our other allies around the table will express the same sentiments.”
– ‘Incomprehensible’ –
The prospect of a global trade has roiled financial markets this week, too, even if they were back in positive territory on Friday.
Berenberg Bank economist Holger Schmieding argued that the direct impact of a US-EU trade war on the world economy would actually be rather small.
Nevertheless, “Trump’s contempt for international rules can deal a significant blow to business confidence especially in trade-oriented nations,” the expert said.
The WTO’s former chief, Pascal Lamy, also said the damage would likely be limited in concrete terms.
“We have to keep things in proportion,” he said on the French radio station France Info. He estimated that the economic impact of the tariffs would amount to “a very small part of trade flows as a whole”.
The German carmakers’ federation described the imposition of tariffs as “incomprehensible”.
“In a connected, global economy, customs barriers don’t benefit anyone, including the United States,” the VDA federation said.
Germany’s carmakers are especially braced for the latest threat from Trump, who earlier this month launched proceedings that could eventually smack tariffs on auto imports into the US.
“I know he has a very particular problem with German cars,” warned Malmstrom.