EU and US brace for a Euro-Atlantic trade war

EU and US brace for a Euro-Atlantic trade war


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US President Donald J. Trump announced late Thursday that he would impose stiff tariffs on steel and aluminium imported from the European Union, Canada, and Mexico – a move that was widely condemned by Washington’s closest allies, which prompted the EU to threatened to reciprocate by punishing US exports in return.

The decision comes after Trump exempted Brussels from a 25% tariff on steel and 10% tax on aluminium imports that he imposed in March – a reprieve that expires at just after noon on June 1.  Trump’s decision is his most aggressive attack against top trading partners and closest political allies since his isolationist and protectionist administration took office nearly 18 months ago.

German public broadcaster DW reported on a last-ditch meeting in Paris on May 30 to avert a trade war.

European Union’s trade commissioner Cecilia Malmstrom told the Wall Street Journal that it is no longer realistic to hope tariffs will be averted. US Commerce Secretary Wilbur Ross expressed similar doubts.

The EU is bracing for retaliation on politically sensitive products that are bound to hurt prominent Republicans, including Harley-Davidson, blue jeans, bourbon whiskey, orange juice, and peanut butter.

In an address to the OECD on May 30, French President Emmanuel Macron warned that “unilateral responses” would trigger imbalances.

Malstrom has said that negotiations will not take place if the EU is not exempt. However, in a statement on Tuesday, she said that she would realistically expect Washington to set a quota, above which, tariffs would apply. Addressing the OECD conference in Paris, US Commerce Secretary Ross demanded talks remain open “with or without tariffs,” just as they have with China.

Echoing Malstrom’s view, Dutch Foreign Trade Minister Sigrid Kaag also told the OECD conference that the EU would expect an “unlimited exemption,” noting that Euro-Atlantic relations were meant to be between two historic allies, which is not the same as with a traditional advisory like China.

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