U.S. products could face new import duties from Europe if President Donald Trump presses ahead with plans to impose tariffs on metals.
“There are indications that President Trump, very soon, in the coming days, we don’t know for sure, may sign-off a decision on import tariffs of 25 percent on steel and 10 percent on aluminium, which he announced on the March 1,” Cecilia Malmstrom, the EU’s commissioner for trade, said Wednesday at a press conference in Brussels.
“This is done under something that’s called section 232, which refers to internal or national security. We have serious doubt about that justification, we cannot see how the European Union friends and allies in NATO can be a threat to national security in the U.S. We find that assumption deeply unjust,” she added.
Trump said last Thursday that the U.S. would be imposing a 25 percent tariff on steel imports and 10 percent on aluminum, aiming to foster production in the United States. The announcement, which has received some criticism from within the president’s party, has raised concerns all over the globe over a potential trade war.
The European Union is the first trade partner to present specific steps against the U.S., if Trump moves ahead with steel and aluminum charges. However, Canada has vowed to come up with its own countermeasures. Mexico, China and Brazil have also said they are considering steps to retaliate.
Last weekend, European Commission President Jean-Claude Juncker said Europe needed to take measures as a response to Trump’s tariff threat. “This cannot be a unilateral transatlantic action by the Americans,” he said.
At the time, he mentioned possible taxes on Harley-Davidson, bourbon and Levi’s.
However, UBS analysts argued that Trump’s intention to impose tariffs on metals is unlikely to have a major impact in Europe. They said Wednesday in a note that “the share of steel and, more so, aluminum in overall euro zone exports is small.”
“Steel accounts for 1.4 percent of euro zone exports to the U.S. … equivalent to 0.2 percent of total euro zone exports… Aluminum accounts for 0.1 percent or less of total exports to the U.S. across the large euro zone countries,” the bank said. “So the direct economic impact of the tariffs on the euro zone should be small and concentrated in the respective sectors.”
However, Trump has also mentioned that there could be new tariffs on European cars, if the EU would retaliate against tariffs on metals.
“Compared to steel and aluminum, exports of automobiles to the U.S. are meaningful,” the UBS analysts said, arguing that an escalation of words and actions between both sides of the Atlantic could have repercussions on their economies.
According to Barclays, a full-blown trade war is not is not a baseline outlook but a “possibility worth monitoring.”
“Most at risk from an escalation are Asian economies, particularly those deeply intertwined in global value chains,” analysts at the bank said in a note on Wednesday.
