E.U. Trade Commissioner Cecilia Malmstrom to take up the issue with U.S. Trade Representative Robert Lighthizer.
The British government is under pressure to exercise its supposed influence in Washington and gain an exemption for Britain’s steel industry from the tariffs on steel and aluminium, a proclamation which was signed on Thursday. It comes as the E.U. sought clarity on whether the exemptions accorded so far by the U.S. extended to it too.
“The E.U. is a close ally of the U.S. and we continue to be of the view that the E.U. should be excluded from these measures,” said E.U. Trade Commissioner Cecilia Malmstrom on March 8 evening, following the U.S. announcement. She is set to meet U.S. Trade Representative Robert Lighthizer in Brussels on the weekend. Last week, the European Commission warned that retaliatory action in the form of tariffs on U.S. imports into Europe, such as on Harley Davidson motor bikes and Levis Jeans, could follow.
Britain’s International Trade Secretary Liam Fox described Mr. Trump’s method for dealing with genuine problems facing the global steel industry by imposing the 25% tariff on steel and 10% on aluminium as “absurd”.
“We can deal multilaterally with overproduction… Protectionism and tariffs never really work,” he told the BBC’s Newsnight programme on March 8, following the announcement. He is set to fly to Washington D.C. for talks on the matter next week.
British steel accounts for 1% of U.S. steel imports, but 5% of U.K. steel exports by volume and 15% of it by value, largely because the exports focus on high value products, including to the U.S. military, some of which were currently not produced in the U.S., Mr. Fox said.
So far, the U.S., which granted exemptions to Canada and Mexico, and has signalled a potential exemption for Australia, has made no mention of excluding Europe or Britain from the sweeping new tariff arrangements. In Britain, this signalled to many that the “special relationship” that Britain had been pointing to when it came to U.S.-U.K. relations post Brexit had negligible tangible significance.
“That the U.K. was missing from that list [of exemptions] shows how weak and isolated the Prime Minister has become and we risk becoming as a country,” said Stephen Kinnock, the Labour MP for Aberavon, where Tata Steel’s Port Talbot plant is located. “She was quick to hold Trump’s hand in the White House last year, but she has shown that she hasn’t got what it takes to force his hand on steel tariffs or do what is required to protect and support the British steel industry.”
But U.K. efforts to push for a national exemption could also fall foul of the E.U. at a crucial time in in Brexit negotiations. “our assumption is that the E.U. is a whole body and that the U.S. will respect that…otherwise, that is questioning the whole E.U. as a project, which is quite dramatic,” Ms. Malmstrom told a business forum on Thursday, the website Poitico reported.
Industry body U.K. Steel also expressed its concerns and called on the U.K. and the E.U. to push for national exemptions. “However, even if the E.U. is ultimately able to gain an exemption, it is still essential the E.U. Commission takes swift action to combat the indirect effects of these tariffs. We must ensure our market is not now destabilised by millions of tonnes of steel diverted away from the U.S. to the E.U.. We trust and hope that the U.K. government will support such measures in due course,” said its director Gareth Stace.
Last week, Tata Steel Europe, for which the U.S. represents 10% of its sales, welcomed the E.U.’s pledge of swift retaliatory action. “The E.U. must not allow the moderate recovery in our industry over the last year to be destroyed by the E.U.’s most important ally,” said a Tata Steel Europe spokesperson at the time.
The steel tariff announcement comes at a crucial time for European industry, which has been in the midst of a modest recovery, in demand and pricing, following several years of crisis that saw shutdowns, both temporary and permanent. In Britain concerns about the future of the industry are heightened by uncertainty about the shape of the trade defence regime the British government will put in place in the wake of Brexit.