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American Shipper

EU adopts retaliatory tariffs on U.S. exports

The list of U.S. exports now subject to additional duties includes steel and aluminum products as well as corn, whiskey and cigarettes.

   The European Union on Friday officially adopted a long list of duties on goods produced in the United States in response to the Trump administration’s import tariffs on steel and aluminum.
   These “rebalancing” measures will immediately target a list of products worth 2.8 billion euros (U.S. $3.27 billion) that includes steel and aluminum products, as well as a wide range of agricultural goods like corn, whiskey and cigarettes. The remaining duties are scheduled to go into force in 2021, provided the U.S. does not exempt the EU from the steel and aluminum tariffs.
   The European Commission last month filed the same list with the World Trade Organization, vowing to seek retaliatory measures to recoup the expected revenue that will be lost upon imposition of the U.S. metals tariffs.
   “The EU will rebalance bilateral trade with the U.S. taking as a basis the value of its steel and aluminum exports affected by the U.S. measures,” the commission said in a statement last week. “Those are worth €6.4 billion. Of this amount, the EU will rebalance on 2.8 billion euros worth of exports immediately. The remaining rebalancing on trade valued at 3.6 billion euros will take place at a later stage — in three years’ time or after a positive finding in WTO dispute settlement if that should come sooner.”
   Cecilia Malmström, European commissioner for trade, said the EU “did not want to be in this position,” but that the “unilateral and unjustified decision of the U.S. to impose steel and aluminum tariffs on the EU means that we are left with no other choice.
   “The rules of international trade, which we have developed over the years hand in hand with our American partners, cannot be violated without a reaction from our side,” she added. “Our response is measured, proportionate and fully in line with WTO rules.
   “Needless to say, if the U.S. removes its tariffs, our measures will also be removed,” Malmström said.
   The EU has been outspoken in its opposition to the U.S. tariffs since President Donald Trump announced them in early March. Initially, it looked as if the union, as well as close trading partners like Canada and Mexico, would be exempted, but Trump dropped the exemptions following unsuccessful negotiations on deals that would likely have replaced those tariffs with quotas.
   Earlier this month, 29 ambassadors of EU countries to the United States penned an open letter arguing that the tariffs and other Trump administration policies threaten what has historically been a mutually beneficial — and highly lucrative — relationship.
   Along with the retaliatory tariff measures, the EU is concurrently undertaking WTO dispute settlement proceedings and a European Commission safeguards investigation to determine whether further action is necessary to “protect the European market from disruptions caused by the diversion of steel from the U.S. market.”
   The imposition of the initial tranche of EU tariffs also comes shortly after the Commerce Department launched an investigation into global automobile imports that could yield tariffs similar to those now being imposed on steel and aluminum imports.
   That investigation, which is being conducted under Section 232 of the Trade Expansion Act of 1962, is supposed to focus on the potential national security impacts of auto imports, but Trump on Friday seemed to indicate another motive for the move.
   “If these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S.,” Trump wrote on Twitter. “Build them here!”
   In a report printed Saturday in the French newspaper Le Monde, EU Commission Vice President Jyrki Katainen said the EU would retaliate against any such action by the United States and called for an end to the public war of words.
   “If they decide to raise their import tariffs, we’ll have no choice, again, but to react,” Katainen said of the potential auto tariff. “We don’t want to fight [over trade] in public via Twitter. We should end the escalation.”
   Trump, meanwhile, doubled down over the weekend, threatening further action against nations that impose retaliatory tariffs in response to the administration’s actions — or any nations that impose tariffs for that matter.
   “The United States is insisting that all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the U.S.A.,” the president tweeted. “Trade must be fair and no longer a one way street!”
   Trade analysts and economists have repeatedly pointed out that free trade agreements like the Transatlantic Trade and Investment Partnership with the European Union and the Trans-Pacific Partnership with 11 other Pacific Rim nations would have substantially reduced or eliminated tariffs on nearly all goods and services, while at the same time addressing intellectual property rights and labor conditions.
   Trump in April directed his administration’s senior economic and trade officials to look into rejoining the TPP, but later clarified that the deal would have to be “substantially better” than the first iteration signed under President Obama.

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