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EU expects to escape Trump's steel and aluminium tariffs Trump announces $60bn of further tariffs on imports from China
(35 minutes later)
The EU celebrated a temporary reprieve as president Trump announced billions of dollars of tariffs on Chinese steel and aluminium in what is likely to be the first move of a bitter trade war between the world’s two biggest economies. Financial markets have taken fright after Donald Trump fired the latest shots in an escalating trade war between the world’s two biggest economies by announcing $60bn (£42.5bn) of further tariffs on China.
Just 24 hours before tariffs were due to be enforced on the EU, the Trump administration announced it was exempting the bloc, along with Australia, Argentina, Brazil, Canada, Mexico and South Korea, while trade talks with those nations were ongoing. Amid relief in Brussels that the EU had won a temporary reprieve from Trump’s already announced action to protect the US from imports of steel and aluminium, Wall Street braced itself for retaliation from Beijing.
The Austrian chancellor, Sebastian Kurz, welcomed the development in a tweet from a summit of EU leaders in Brussels. “A trade war would have damaged both sides”, he said. Trump told reporters that the US trade deficit with Beijing was out of control at about $504bn.
Some £35bn worth of Chinese imports to the US are to be hit by tariffs of 25% on steel and 10% on aluminium. “It is the largest deficit of any country in the history of our world. It’s out of control,” the US president said as he signed a memorandum. “We have a tremendous intellectual property theft situation going on, which likewise is hundreds of billions of dollars.”
Trump told reporters that the US trade deficit with Beijing was “out of control” at about $504bn and there was also a huge “intellectual property theft situation”. Just 24 hours before tariffs were to be enforced on the EU, the Trump administration announced it was exempting the bloc, along with Australia, Argentina, Brazil, Canada, Mexico and South Korea, while trade talks with those nations were ongoing.
“It is the largest deficit of any country in the history of our world. It’s out of control”, Trump said as he signed a memorandum. “We have a tremendous intellectual property theft situation going on, which likewise is hundreds of billions of dollars.” The Austrian chancellor, Sebastian Kurz, welcomed the development in a tweet from a summit of EU leaders in Brussels. “A trade war would have damaged both sides,” he said.
The US government has conducted a seven month investigation into tactics China has used to challenge US supremacy in technology, such as dispatching hackers to steal commercial secrets and demanding US companies hand over trade secrets to gain access to the Chinese market. About £35bn worth of Chinese imports to the US will be affected by tariffs of 25% on steel and 10% on aluminium.
White House aide Peter Navarro told reporters the US was “strategically defending itself [from] … economic aggression”, he said. The White House said Trump would direct the Office of the United States Trade Representative (USTR) to publish a new list of proposed tariffs within 15 days. They are likely to cover sectors such as robotics, hi-tech trains and aerospace. There will then be 30 days for responses. In January, Trump imposed tariffs on solar panels and washing machines.
The White House said that Trump would direct the office of the US trade representative to publish a list of proposed tariffs within 15 days. They are likely to cover sectors such as robotics and aerospace. There will then be 30 days for responses. In January, Trump imposed tariffs on solar panels and washing machines. Peter Navarro, a White House aide, told reporters the US was “strategically defending itself [from] … economic aggression”.
US stock markets reacted negatively, with the Dow Jones Index dropping more than 300 points. Caterpillar, 3M and Boeing – all with significant exposure to China – were among the biggest fallers. Bank and tech stocks also fell. At one point, the index was down 500 points, although by lunchtime in the US it had recovered on news that the tariffs would be subject to a period of consultation and was down 1.1% or 287 points. The FTSE-100 closed down 86 at 6952.59, or 1.23%. US stock markets reacted negatively, with the Dow Jones Index dropping more than 300 points on Thursday. Caterpillar, 3M and Boeing – all with significant exposure to China – were among the biggest fallers. Bank and tech stocks also fell. At one point, the index was down 500 points, although by lunchtime in the US it had recovered on news that the tariffs would be subject to a period of consultation and was down 1.1% or 287 points. The FTSE-100 closed down 86 at 6952.59 – the first time the index has closed below 7,000 since December 2016.
China has warned that it will take “all necessary measures” to defend itself. Hua Chunying, a foreign ministry spokeswoman, referred to imports of US soybeans, airplanes, cotton and cars, saying they could be viewed as examples of “unequal” trade. The US also “refuses to export what China wants”, Hua said, possibly referring to restrictions on technology and military sales. China has warned it would take “all necessary measures” to defend itself. Hua Chunying, a foreign ministry spokeswoman, referred to imports of US soybeans, aeroplanes, cotton and cars, saying they could be viewed as examples of “unequal” trade. The US also “refuses to export what China wants”, she said, possibly referring to restrictions on technology and military sales.
“We are firmly against unilateralism and protectionism,” Hua said. “China will not watch our legal interest being harmed.” “We are firmly against unilateralism and protectionism,. China will not watch our legal interest being harmed.,” Hua added.
Dozens of industry groups sent an open letter last weekend to the White House warning that “the imposition of sweeping tariffs would trigger a chain reaction of negative consequences for the US economy, provoking retaliation; stifling U.S. agriculture, goods, and services exports, and raising costs for businesses and consumers”. Dozens of industry groups signed an open letter last weekend to the White House warning that “the imposition of sweeping tariffs would trigger a chain reaction of negative consequences for the US economy, provoking retaliation; stifling U.S. agriculture, goods, and services exports, and raising costs for businesses and consumers”.
The EU argued in recent months that as a close ally it should be exempt, and had threatened to impose a series of retaliatory measures including import duties on their products. The EU argued in recent months that as a close ally of the US it should be exempt, and had threatened to impose a series of retaliatory measures including import duties on their products.
Ahead of Trump’s comments, the US trade representative, Robert Lighthizer, told a senate committee that Trump had personally decided “to pause the imposition of tariffs with respect to those countries” with which trade talks were ongoing. Speaking before Trump’s comments, the USTR, Robert Lighthizer, told a Senate committee that the president had personally decided “to pause the imposition of tariffs with respect to those countries” with which trade talks were ongoing.
But the decision was only given a cautious welcome by British steel makers. Trump has had few kind words to say about the EU, claiming it had made life difficult for US exporters.
Gareth Stace, the director of UK Steel, warned that US protectionism would still have a heavy impact on European nations unless Brussels took its own measures to stem the flow of aluminium and steel into the EU. Earlier this month he told reporters: “The European Union has been particularly tough on the United States. They make it almost impossible for us to do business with them.”
“Tariffs are set to divert millions of tonnes of steel away from the US towards other open markets”, he said. “At 40m tonnes a year, the EU is by far the largest import market in the world and will be the obvious target for major steel exporters to the US such as Turkey and Russia. As the proposed further tariffs on China were unveiled Trump called for the EU to respond to his temporary amnesty with a willingness to cut tariffs on US exports to Europe. The EU’s response is among topics of the EU leaders’ summit dinner on Thursday.
Stace added: “The top priority here must be for the EU commission to swiftly introduce safeguard measures to guard against further expected import surges. Cecilia Malmström, the EU commissioner for trade, held two days of talks with her US counterpart, Wilbur Ross, before the announcement.
“Crucially, these measures must cover the same product range as the US tariffs. It is vital we do not leave large segments of the sector exposed and scupper the sector’s fragile and nascent recovery from the crisis of recent years.” The reprieve for the EU was only given a cautious welcome by British steel makers.
The EU’s response to the pause is one of a number of issues being discussed by leaders at a summit dinner on Thursday. Gareth Stace, the director of UK Steel, warned that US protectionism would still have a heavy impact on European countries unless Brussels took its own measures to stem the flow of aluminium and steel into the EU.
The EU’s commissioner for trade, Cecilia Malstrom, had held two days of intensive talks with the US commerce secretary Wilbur Ross ahead of the announcement. “Tariffs are set to divert millions of tonnes of steel away from the US towards other open markets,” he said. “At 40m tonnes a year, the EU is by far the largest import market in the world and will be the obvious target for major steel exporters to the US such as Turkey and Russia.”
On returning to Brussels, Malmstrom had said she was confident Ross would suggest a temporary exemption for the EU but was wary the situation could unravel once the decision was in the president’s hands. He added: “The top priority here must be for the EU commission to swiftly introduce safeguard measures to guard against further expected import surges.”
Trump has had few kind words to say about the EU, claiming that it had made life difficult for US exporters.
Earlier this month the president told reporters: “The European Union has been particularly tough on the United States. They make it almost impossible for us to do business with them.”
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