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Abu Dhabi, UAEWednesday 20 June 2018

US trade envoy meets with EU and Japan over steel tariff row

The 28-nation bloc has warned of retaliatory action on peanut butter and orange juice following announcement by Donald Trump

European Commissioner for Trade Cecilia Malmstrom (C), US trade representative Robert Lighthizer (L) and Japan's Economy Minister Hiroshige Seko arrive for talks over US steel tariffs. Stephanie Lecoco/AFP
European Commissioner for Trade Cecilia Malmstrom (C), US trade representative Robert Lighthizer (L) and Japan's Economy Minister Hiroshige Seko arrive for talks over US steel tariffs. Stephanie Lecoco/AFP

Donald Trump’s trade envoy met Saturday with senior European Union and Japanese officials amid threats of a broader trade war unless they secure exemptions from planned US steel tariffs.

The European Union said that it will respond with its own tariffs on products like peanut butter and orange juice if the US goes ahead with the tariffs in two weeks. Japan has also warned of the dangers of tit-for-tat measures.

US trade representative Robert Lighthizer met Saturday in Brussels with EU Trade Commissioner Cecilia Malmstroem and Japanese Economy, Trade and Industry Minister Hiroshige Seko.

The meetings had been previously planned but took on greater importance because of the US president’s announcement of a 25 per cent tariff on steel imports and 10 per cent on aluminium imports.

Key US trading partners and businesses have warned the tariffs could backfire, provoking a trade war and hurting allies like the EU and Japan more than China, their main target.

The EU exported about 5.5 million tonnes of steel to the US last year. The US bought 5 per cent of Japan's steel last year but just 1.1 per cent of China's steel.

Japan's government warned the measure could hurt its economic relations with the US. Mr Seko warned before the talks that “falling to exchanges of unilateral measures will not be in the interest of any country,” according to the Kyodo news agency. He was apparently referring to the EU threats of retaliation.

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Mr Trump argues the tariffs are designed to protect US jobs and national security. He said Canada and Mexico are exempt for now, and other countries could be spared if they can convince the administration that their steel and aluminium exports don't threaten American industry.

Mr Trump said he spoke with Australia’s prime minister, Malcolm Turnbull, on Friday and were working on an agreement to avoid steel tariffs.

The EU insists that it is committed to open, global trade. Ms Malmstroem said the real problem is an oversupply of steel on global markets.

She rejected Trump's assertion that the tariffs are needed to protect US national security, especially when most EU countries are members of Nato.

“We are friends. We are allies. We work together. We cannot possibly be a threat to national security in the US, so we are counting on being excluded,” she said Friday.

Foreign steel producers are not only concerned about losing access to the US market but also that steel from other exporters will flood already saturated markets, threatening jobs elsewhere.

“There is no more eloquent testimony to the Government's utter naivety about trade, that at a time when the world is descending into trade war, they put more faith in the Wild West warmonger in Washington and the bully of Beijing than they do in our established friends and trade partners in Europe,” said Vince Cable, the leader of UK opposition party the Liberal Democrats.