TRADE RESTRICTIONS

Trump Tariffs Loom for European Steel Industry

Salzgitter AG
Sparks are about to fly between the US and the EU. Picture source: DPA.

European steel manufacturers will have to prepare themselves for damaging export restrictions imposed by the United States. The imminent measures will “cause extreme damage to the European steel industry,” the European Union trade commissioner, Cecilia Malmström, warned on Tuesday. The EU would respond to the measures if necessary, she added.

In April, American President Donald Trump asked US commerce secretary Wilbur Ross to examine import restrictions, including tariffs and possible quotas for foreign steel products. Mr. Ross has said he expects to submit his report to the president by the end of this month. Speaking Tuesday, he said the report was still a “work in progress” but the president would take “bold action without delay.” After Mr. Ross’s comments, the share prices of US-based steel companies rose sharply.

The basis of the report on steel is a US law which allows import limitations on grounds of national security. The administration argues that foreign competition may prevent American steel manufacturers from guaranteeing supply to the US military. Import restrictions imposed on this basis would likely impact all importers. However, according to a study by the Peterson Institute for International Economics, European suppliers would be harder hit than their Chinese competitors.

Fourteen percent of European Union steel exports currently go to the American market, a total of 3.3 million tonnes.

Earlier statements from the US government suggested that Chinese steelmakers were the main target of measures. However, the United States has already imposed numerous anti-dumping penalties on Chinese companies. In Germany, the steel manufacturers Salzgitter and Dillinger Hütte have already been hit by anti-dumping measures. In recent months, the European Union has itself imposed tariffs on Chinese steel imports, which it claims benefits from Chinese government subsidies.

The Federation of German Steel Industry has not yet responded to the reports; it is said to be waiting for concrete measures before taking a public position. Its president, Hans Jürgen Kerkhoff, has warned repeatedly of the danger of growing protectionism worldwide. Limitations on steel imports to the United States could have serious consequences for Germany’s steel industry. Fourteen percent of European Union steel exports currently go to the American market, a total of 3.3 million tonnes. Of this figure, 2.4 million tonnes are produced in Germany.

The European Commission and the German government have both severely criticized the American government’s plans. Ms. Malmström spoke of “protectionist measures which worry us a great deal.” In an interview with Bloomberg on Monday, she said Europe would unquestionably retaliate against any moves to block the US market. In a letter to Mr. Ross,  German Economics Minister Brigitte Zypries protested the new measures. The US commerce secretary’s proposals are currently under discussion in Washington, where the administration is divided on the controversial measures.

Berlin and Brussels have dismissed claims that European steel imports are a danger to US national security. Almost all EU states are NATO allies of the United States, said Ms. Malmström. The European Commission has pointed out that only three percent of American steel consumption goes to defense and internal security.

 

Till Hoppe reports on politics for Handelsblatt, with a focus on defense, domestic policy and cyber issues.Thomas Jahn is Handelsblatt’s New York bureau chief. Martin Wocher is an editor with Handelsblatt, focusing on the mechanical engineering and steel industries. To contact the authors: hoppe@handelsblatt.com, jahn@handelsblatt.com, wocher@handelsblatt.com.

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