The leaders of the EU’s three largest economies have agreed to take retaliatory measures in the event of a trade war with the US.
Theresa May, Angela Merkel and Emmanuel Macron spoke together on a call yesterday to agree that they intend to retaliate in the event of a trade war with the US. European Commissioner for Trade Cecilia Malmström is due to speak to Wilbur Ross, US secretary of commerce, later today to voice concerns.
The US announced new tariffs of 25% on steel and 10% on aluminium imports earlier this year, but following threats of retaliation from European Commission President Jean-Claude Juncker, a temporary reprieve was granted to the EU, along with Australia, Canada, Mexico and others.
The reprieve will end tomorrow, at which point the tariffs will enter into force. The move sought to primarily target China, which is one of the largest steel exporters in the world and with which the US has a $502tn (~€415tn) trade deficit. However, EU officials have warned that it will disproportionately and unfairly impact European exports.
How might the EU respond?
It has been suggested that special exemptions might be made for the EU, particularly following meetings between US president Donald Trump and Macron and Merkel in Washington this week. However, concerns have also been raised that the US might make unreasonable demands in negotiations.
The Guardian reports that on a previous call between Ross and Malmström, the US demanded that the EU voluntarily limit exports of steel and aluminium to 90% of the average 2016 and 2017 levels, which was refused by the EU.
Juncker had previously suggested that the EU could introduce tariffs of its own, on whisky, Harley-Davidson motorcycles, and other iconic US exports. However, officials at both national and European levels have also warned that a trade war with the US could potentially be extremely damaging to both economies.
Meanwhile, the French Presidency has issued a statement suggesting that, following talks between Merkel, May and Macron, the EU will be ready to react in the event of a trade war.
