President Donald Trump’s administration is thought to be planning to impose tariffs on European steel and aluminium imports after failing to win concessions from the European Union, a move that could provoke retaliatory tariffs and inflame trans-Atlantic trade tensions.
The tariffs are likely to go into effect on the EU with an announcement by Friday’s deadline, according to two people familiar with the discussions. They said the administration’s plans could change if the two sides are able to reach a last-minute agreement.
Mr Trump announced in March the United States would slap a 25% tariff on imported steel, and a 10% tariff on imported aluminium, citing national security interests. But he granted an exemption to the EU and other US allies, a reprieve that expires on Friday.
Europe has been bracing for the US to place the restrictions even as top European officials have held last-ditch talks in Paris with American trade officials to try to avert the tariffs.
“Realistically, I do not think we can hope” to avoid either US tariffs or quotas on steel and aluminium, said Cecilia Malmstrom, the European Union’s trade commissioner.
Even if the US were to agree to waive the tariffs on imported steel and aluminium, Ms Malmstrom said, “I expect them nonetheless to want to impose some sort of cap on EU exports.”
European officials said they expected the US to announce its final decision on Thursday. The people familiar with the talks said Mr Trump could make an announcement as early as Thursday.
US Commerce Secretary Wilbur Ross attended meetings at the Organisation for Economic Cooperation and Development in Paris on Wednesday, and US Trade Representative Robert Lighthizer joins discussions in Paris on Thursday.
The US plan has raised the threat of retaliation from Europe and fears of a global trade war – a prospect that is already weighing on investor confidence and could hinder the global economic upturn.
If the US moves forward with its tariffs, the EU has threatened to impose retaliatory tariffs on US orange juice, peanut butter and other goods in return.
French finance minister Bruno Le Maire pledged that the European response would be “united and firm”.
Besides the US steel and aluminium tariffs, the Trump administration is also investigating possible limits on foreign cars in the name of national security.
“Unilateral responses and threats over trade war will solve nothing of the serious imbalances in the world trade. Nothing,” French president Emmanuel Macron said in an impassioned speech at the Organisation for Economic Cooperation and Development in Paris.
In a clear reference to Mr Trump, Mr Macron added: “These solutions might bring symbolic satisfaction in the short term… One can think about making voters happy by saying, ‘I have a victory, I’ll change the rules, you’ll see’.”
But Mr Macron said those “who waged bilateral trade wars… saw an increase in prices and an increase in unemployment.”
Tariffs on steel imports to the US can help local producers of the metal by making foreign products more expensive. But they can also increase costs more broadly for US manufacturers who cannot source all their steel locally and need to import the raw material. That hurts the companies and can lead to more expensive consumer prices, economists say.
Mr Ross criticised the EU for its tough negotiating position.
“There can be negotiations with or without tariffs in place. There are plenty of tariffs the EU has on us. It’s not that we can’t talk just because there’s tariffs,” he said. He noted that “China has not used that as an excuse not to negotiate”.
But German economy minister Peter Altmaier insisted the Europeans were being “constructive” and were ready to negotiate special trade arrangements, notably for liquefied natural gas and industrial goods, including cars.
Mr Macron also proposed to start negotiations between the US, the EU, China and Japan to reshape the World Trade Organisation to better regulate trade. Discussions could then be expanded to include other countries to agree on changes by the end of the year.
Mr Ross expressed concern that the Geneva-based World Trade Organisation and other organisations are too rigid and slow to adapt to changes in global business.
“We would operate within (multilateral) frameworks if we were convinced that people would move quickly,” he said.
The OECD, an international economic agency that includes the US as a prominent member, issued a report on Wednesday saying “the threat of trade restrictions has begun to adversely affect confidence” and tariffs “would negatively influence investment and jobs”.
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