MEPs back Commission on rule-based response to Trump on tariffs

EU Trade chief Cecilia Malmström underlined that "imposing tariffs on each other would not be a good solution." [European Commission]

EU trade chief Cecilia Malmstöm said on Wednesday (14 March) that the European Commission is prepared to put in place its own safeguard measures, in line with international obligations, as a response to US tariffs.

“We suspect that the US move is effectively not based on security considerations but economic safeguards in disguise,” European Commissioner Malmstöm told MEPs during a plenary debate in Strasbourg.

Trump’s plan to impose 25% tariffs on imports of steel and 10% on imports of aluminium sparked international outcry last week, although the Trump administration has since attempted to soften the blow by saying it would consider exceptions, starting with Canada and Mexico.

EU 'will react firmly' to US steel, aluminium tariffs

The EU “will react firmly” to defend its interests against steep US trade tariffs on steel and aluminium, the European Commission chief Jean-Claude Juncker said yesterday (1 March).

The EU is pushing for exemptions in order to avoid a trade war between close allies.

“We are ready to act in a firm, resolute and proportionate way according to WTO rules. We don’t want things to escalate. We don’t want trade wars as they are easy to lose,” Malmström said, stressing that the main problem on the global steel market is China’s overcapacity by state-owned companies.

“We’ll manoeuvre carefully but we need to protect our citizens and jobs,” reassured MEPs, adding that the Commission will be able to report very soon in detail.

Malmström talked about three strands of measures, comprising one within the WTO, another concerted actions with trade partners, especially those mostly affected by US tariffs, like Brazil, and a number of immediate safeguard measures that would protect EU jobs.

A chorus of support came from across the political spectrum. S&D MEP Bernd Lange, chair of the International trade committee, doubted that Trump’s ‘punitive’ action had anything to do with security. “It is not possible to circumvent international rules for domestic policies,” he stressed.

Trump described the dumping of steel and aluminium in the US market as an “assault on our country,” adding that domestic production was vital to national security. “If you don’t want to pay tax, bring your plant to the USA,” he said.

EPP chair Manfred Weber insisted that the EU should not overreact but act decisively as the US tariffs would hit thousands of jobs. He begged however to keep open the channels of communication with the US.

Liberal MEP Marietje Schaake praised Malmström for doing everything within her powers to prevent a trade war with the United States.

“At the same time Europe, faced with a volatile Trump in the White House, has to be prepared for any scenario. If Trump pushes through his reckless measures, we cannot hesitate a second and must immediately take balancing measures,” she said.

MEPs remain puzzled by the procedure through which an exception can be negotiated and with whom. “The procedure… is shrouded in ambiguity,” conceded Schaake. “Yet the clock keeps on ticking. This not only puts geopolitical relations under pressure, but has also plunged companies and consumers on both sides of the Atlantic into great insecurity.”

Tit-for-tat from cars to orange juice

The EU has promised to respond to Trump’s stiff tariffs, warning that counter-measures would include European tariffs on US exported orange juice, bourbon, denim, peanut butter and cranberries.

EU could hit peanut butter, orange juice, whiskey in Trump trade row

The EU warned US President Donald Trump on Wednesday to step back from the brink of a trade war or it would hit flagship US products, such as peanut butter and whiskey.

Trump accused Brussels of treating the US “very badly on trade” and threatened to tax German cars as a retaliation to EU tariffs on US cars.

The US already has a 2.5% duty tax on European cars against the 10% tax which the EU levies on American-made cars.

“Yes, the EU has tariffs on US cars – rebutted Malmström – but the US has a 25% tariffs on trucks and pickups.”

The EU trade chief noted that tariffs must be seen in their entirety, especially in the absence of a free trade agreement between two countries.

European Commission Vice-President Jyrki Katainen said the EU had to find a solution ‘to clear up this mess’ that would respect the rule of law rather than the rule of the strongest.

Malmström said she was convinced that if the case were taken to the WTO, the EU would win, stressing that the WTO is not perfect but served international rule-based trade well in the last decades and “needs to be strengthened rather than weakened”.

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