Trump temporarily excludes EU from higher tariffs, announces measures to ‘punish’ China

US President Donald J. Trump speaks before signing a presidential memorandum targeting what the White House termed 'China’s economic aggression' in the Diplomatic Room of the White House in Washington, DC, USA, 22 March 2018. [Jim Lo Scalzo/EPA/EFE]

US President Donald Trump yesterday (22 March) temporarily excluded six countries and the European Union from higher import duties on steel and aluminium due to come into effect today.

In a presidential proclamation issued late yesterday, Trump said he would suspended steel tariffs for Argentina, Australia, Brazil, South Korea, Canada, Mexico and the European Union until 1 May 2018, amid ongoing discussions.

He however announced tariffs on Chinese imports over the “theft” of intellectual property, fuelling fears of a looming trade war.

In a signing ceremony at the White House, Trump said the measures were “a long time in the making” and represent “the first of many” actions his administration will be taking to ensure fair trade with China.

The United States is set to begin imposing import duties of 25% on steel and 10% on aluminium from today (23 March).

“I have determined that the necessary and appropriate means to address the threat to the national security posed by imports from steel articles from these countries is to continue these discussions and to exempt steel articles imports from these countries from the tariff, at least at this time,” according to the proclamation published by the White House yesterday.

While China is the world’s largest steel producer, it accounts for less than one percent of US imports and sells only 10% of its wrought aluminium abroad. The US is expected in the next 15 days to publish a list of other Chines products eligible for tariffs.

EU leaders, gathered for a summit in Brussels, were expected to discuss the trade row with the US yesterday (22 March), but Council President Donald Tusk postponed the agenda item for today.

EU leaders postpone decision on trade amid wariness over US tariff exemption

EU leaders postponed a decision on trade as the first day of a European Council summit wrapped up around 1AM on Friday morning (23 March), in a display of their wariness about the Trump administration’s announcement hours earlier that it will exempt Europe from tariffs on steel and aluminium.

As a result, Theresa May, whose presence was not needed on the second day of the summit, changed program.

The exemption from tariffs, if it is confirmed, followed EU Trade Commissioner Cecilia Malmström’s trip to Washington for talks with US Trade Representative Robert Lighthizer and US Commerce Secretary Wilbur Ross.

Briefing EU ambassadors and the European Parliament yesterday morning, she had indicated there was a greater willingness to find a solution to avert a trade war.

The European Commission has proposed that, if tariffs are imposed, the bloc should challenge them at the World Trade Organization, consider measures to prevent metal flooding into Europe and impose import duties on US products to “rebalance” EU-US trade.

Tech tax

The EU leaders’ also discussed taxation, another topic that threatens to expose transatlantic strains.

The European Commission on Wednesday proposed rules to make digital companies pay more tax, with US tech giants such as Google, Facebook and Amazon set to foot a large chunk of a potential €5 billion.

EU Economics Commissioner Pierre Moscovici brushed off accusations that he was going after rich American tech companies to enrich EU coffers and France, Germany, Italy, Britain and Spain welcomed the proposals in a joint statement.

However, some smaller countries fear the proposed tax would undermine their ability to attract multinationals and see the measure as more likely to shift tax revenue to bigger EU countries rather than raising more money.

China response

China released today a list of potential tariffs on $3 billion worth of US goods, from pork to fruits and wine that it could impose in response to new US trade duties.

The commerce ministry warned that a 15% tariff on 120 goods worth almost $1 billion — including fresh fruit, nuts, ginseng and wine — would be imposed if the United States fails to reach a negotiated agreement.

In a second phase, a 25% duty would be imposed on eight goods totalling nearly $2 billion, including pork and aluminium scrap, after “further evaluating the impact of the US measures on China,” it said in a
statement.

The ministry said the list was aimed at offsetting the losses incurred from US tariffs on steel and imports, which are due to take effect today.

But the statement also came hours after Trump announced tariffs on Chinese imports over the “theft” of intellectual property, fuelling fears of a looming trade war.

“China and the United States as the world’s top two economies, cooperation is the only right choice for the two countries,” the commerce ministry statement said.

China “urges the US side to resolve the concerns of the Chinese side as soon as possible” through dialogue and “avoid damage to the overall situation of Sino-US cooperation,” it said.

The list noticeably does not include soybeans, which Chinese state-run newspaper the Global Times had suggested should be targeted by Beijing.

It would be a major blow to US farmers, as a third of their soybean exports go to China, in a business worth $14 billion last year.

And the political stakes are high: Trump defeated Hillary Clinton in the 10 top soybean-producing states in the 2016 election.

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