U.S. Imposes Steel, Aluminum Tariffs on EU, Canada, Mexico

by Bamidele Ogunberu Last updated on June 5th, 2018,

Washington, D.C. USA:  The U.S. will impose tariffs on steel and aluminum imports on  Canada, Mexico and the European Union, starting Friday, Commerce Secretary Wilbur Ross said Thursday. Canada and Mexico previously got exemptions while U.S. officials sought to renegotiate the North American Free Trade Agreement, NAFTA, and the EU also had an exemption.

The tariffs of 25% on steel imports and 10% on aluminum were announced in March by President Trump under a law that allows trade barriers on national security grounds.

Starting Friday, steel and aluminum products from Canada, Mexico and the European Union will be subject to the same tariffs as most other nations when imported into the U.S., Mr. Ross told reporters in a call.

Commerce Secretary Ross said NAFTA talks ‘didn’t get far enough’ for Mexico and Canada to avoid tariffs. “Those talks have been taking longer than we had hoped,” Mr. Ross said.

“We had discussions with the European Commission and while we made some progress, they also did not get to the point where it was warranted either to continue the temporary exemption or have a permanent exemption,” Ross said.

Mr. Ross led talks with the European Union—which also had a temporary exemption to the tariffs—on a trade arrangement to allow for a permanent exemption for the bloc. However, the U.S. and the EU, which includes most members of the North Atlantic Treaty Organization, haven’t reached an agreement.

“We continue to be quite willing and indeed eager to have further discussions with all of those parties,” Mr. Ross said.

“We take the view that without a strong economy, you can’t have strong national security,” he said. “The president’s overwhelming objective is to reduce our trade deficit.” Mr Ross added.

EU officials say their shipments don’t hurt national security and have vowed to retaliate against U.S. exports.

EU Commissioner for Trade Cecilia Malmström said that ”today is a bad day for world trade.”

“We did everything to avoid this outcome,” said Malmström, who had repeatedly met during the past couple of months with Trump administration officials in Washington to reach an exemption agreement.

EU chief Juncker said US tariffs on the bloc’s steel and aluminum are “protectionism, pure and simple.” . The  EU said it will  announce ‘counterbalancing’ measures against the U.S.  in next hours.

EU chief Juncker said US tariffs decision leaves the bloc with “no choice” but to impose counter-measures.

Juncker also said the  U.S. leaves the EU no choice but to proceed with a WTO dispute settlement after U.S. announced it would impose new tariffs on steel, aluminum products

Mexico answered the US tariffs with its own on products including pork bellies, grapes, apples and flat steel.

Mexico responded to U.S. steel and aluminum tariffs by imposing wide-ranging “equivalent” measures on farm and industrial products, the economy ministry said on Thursday, ratcheting up tensions during talks to renegotiate NAFTA.

The Mexican measures, which target pork legs, apples, grapes and cheeses as well as steel, could hit farm states that are a bastion of support for U.S. President Donald Trump, ahead of American midterm elections in November.

The Mexican measures will be in place until the U.S. government eliminates its tariffs, the ministry said.

“Mexico profoundly regrets and condemns the decision by the United States to impose these tariffs on imports of steel and aluminum from Mexico,” the ministry said.

“Mexico reiterates its openness to constructive dialogue with the United States, its support for the international commerce system and its rejection of unilateral protectionist measures,” it said.

Mexico buys more steel and aluminum from the United States than it sells. It is the top buyer of U.S. aluminum and the second buyer of U.S. steel, the economy ministry said.

The countermeasures will hit U.S. hot and cold rolled steel, plated steel and tubes, the ministry said.

Shares of Canadian steel producer Stelco Holdings hit a four-week low, down 2 percent after the U.S. imposes metals tariffs on EU, Canada and Mexico.

Canada announced that it is imposing dollar-for-dollar tariffs on steel and aluminum on the U.S., starting July 1.

Prime Minister Justin Trudeau retaliated swiftly against President Donald Trump’s metals tariffs by imposing his own levies on as much as C$16.6 billion ($12.8 billion) of U.S. imports in what Canada calls its strongest trade action since the Second World War.

Trudeau invoked decades of battles fought alongside the U.S. and defending North American airspace as proof the U.S. tariffs based on a national security investigation are “unacceptable” and “punitive.” The Canadian tariffs of 25 percent on steel and 10 percent on aluminum will aim to match U.S. penalties on a dollar-for-dollar basis, based on export values, according to Foreign Affairs Minister Chrystia Freeland.

Canada is the top supplier of steel to the US, accounting for 17 percent of all imports. The US accounts for 90 percent of Canada’s steel exports, however.

Fears of a trade war between the US and its allies were bolstered by reports the that US President Donald Trump is also seeking to levy imports of German cars; the tariffs would be similar to those on steel and aluminum.

Trump maintains that the US has been unfairly treated in trade with its neighboring and oversees partners.

Trump reportedly told French president Emmanuel Macron that he would stick by his hardline trade policy “until no Mercedes models rolled on Fifth Avenue in New York.” according to German media.

US stocks shuddered at the news with the The Dow Jones Industrial Average dipping over one percent, S&P 500 dropping 0.54 percent, and the Nasdaq going down 0.16 percent.

On the campaign trail, Trump repeatedly accused China of trading unfairly and contributing to the hollowing out of America’s manufacturing sector. And the president may still follow through on threats to levy tariffs directly aimed at Chinese goods. But for now, he has chosen sweeping metals tariffs that are opening a separate front of trade tension with traditional allies.

The metals duties deal a blow to negotiations with Mexico and Canada on a new North American Free Trade Agreement. In the longer term, the U.S. likely faces months and possibly years of litigation at the World Trade Organization. While WTO rules allow member countries to put in place trade measures that protect their “essential security,” the EU and Canada have pledged to challenge the U.S. actions at the international trade tribunal.

UPDATE: Canada filed a challenge to the U.S. tariffs on steel and aluminum with the World Trade Organization on Friday and said it will request a Chapter 20 panel under the North American Free Trade Agreement on Friday in response to the U.S. move.

“These unilateral tariffs, imposed under a false pretext of safeguarding U.S. national security, are inconsistent with the United States international trade obligations and WTO rules,” Foreign Minister Chrystia Freeland said in a statement.

“Canada will closely collaborate with the European Union, which also filed a WTO challenge today, as well as with other like-minded countries, on opposing these tariffs,” she added.

Mexico on Tuesday announced import tariffs for US farm and steel products in retaliation for US tariffs on steel and aluminium products.

The tariffs that were published in an official bulletin include 20 per cent for pork, cheese, apples, ham and potatoes, and 25 per cent for Bourbon whisky and fresh cheese.

Tariffs were also imposed on steel products including plates, bars, rods and rolled steel, as well as motor boats.

The Mexican tariffs on pork were among those expected to hurt the United States the most, as Mexico has been importing almost 90 per cent of its pork from its northern neighbour.

Some of the tariffs are due to enter into force immediately, others by Thursday and some by the end of the year.

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