Published: Thu, May 31, 2018
Business | By Pearl Harrison

Steel and aluminum tariffs to apply to EU, Mexico, Canada

Steel and aluminum tariffs to apply to EU, Mexico, Canada

The three close US allies had been part of a small group of foreign governments that received temporary exemptions from the tariffs, until trade deals could be signed.

The European Commission, which coordinates trade policy for the 28 EU members, has said the bloc should be permanently exempted from the tariffs since it is an ally and not the cause of steel and aluminum over-capacity.

He said the tariffs will in the long run increase the cost of global beer production but have a disproportionate impact on American brewers and jobs.

"Over the past months we have continuously engaged with the USA at all possible levels to jointly address the problem of overcapacity in the steel sector", says European Commission President Jean-Claude Juncker. Unilateral responses and threats over trade war will solve nothing of the serious imbalances in the world trade.

"We have been, and will continue, to work closely with our customers on potential product exclusions as the vast majority of the products Tata Steel Europe exports to the USA can not be made by United States steel companies, such as our extra wide strip, battery quality hot rolled material as well as certain packaging steels", he said.

Some stocks of USA companies that could be adversely affected by the tariffs, or by possible retaliatory action against the US, headed down.

German Chancellor Angela Merkel said the European Union response will be "intelligent, decisive and joint", adding that the tariffs are incompatible with WTO rules. The International Monetary Fund has warned that a wave of protectionist forces are the biggest risk to the global economic outlook.

Washington will impose tariffs on steel and aluminum imports from the European Union, Canada and Mexico from midnight on Thursday, ending months of uncertainty over potential exemptions and sharply escalating the risk of a trade war.

The decision to impose tariffs came as a shock to Canada and Mexico, as both countries thought they would be spared from the levies because of earnest negotiations they have had with administration officials over NAFTA.

More than 60 percent of USA auto imports - an industry that closely binds U.S. and Canadian manufacturing - come from G7 countries, as well as more than 50 percent of aluminium imports and almost 36 percent of steel. U.S. Steel Corp., AK Steel Holding Corp. and Steel Dynamics Inc. all gained in NY.

Canada and Mexico were temporarily exempted from blanket tariffs of 25 per cent on steel and 10 per cent on aluminum, with the Trump administration tying a permanent reprieve to a renewed North American Free Trade Agreement pact.

'The next question would be: how will the President react?

In 2002, president George W. Bush imposed tariffs on steel imports for much the same reason as Trump-combating cheap imports from other countries-but ended them when the World Trade Organization ruled them illegal.

Trump announced worldwide steel and aluminum tariffs in March but granted exemptions to some major trading partners. "The fact that we took a tariff action does not mean there can not be a negotiation".

"We are on the losing side of nearly all trade deals".

In the name of national security, the Trump administration is also investigating possible limits on foreign cars. "Tariffs on steel and aluminum imports are a tax hike on Americans and will have damaging consequences for consumers, manufacturers and workers", said Sen.

"We continue to hope the exemption will be extended while Nafta talks are ongoing and ultimately there is a positive resolution that doesn't involve a tariff or a quota", said Galimberti of the steel producers' association. In the case of Canada and Mexico, the US had hoped to address its national security concerns in the context of ongoing efforts to renegotiate NAFTA, but those talks have taken longer than expected and there is now no precise end date in sight, Ross said.

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