DNEPR, Ukraine — The European Commission's pledge of “appropriate and swift measures” was welcomes by European steel association Eurofer after the United States finally announced Section 232 trade tariffs.
US president Donald Trump on March 1 announced the imposition of import duties of 25% on steel and 10% aluminium.
"We welcome the [EC] announcement [that] appropriate and swift measures will be taken to safeguard the interests and jobs in our industry. The European Union must not allowthe moderate recovery in our industry over the past year [to be] destroyed by the EU's most important political ally," Eurofer director general Axel Eggert said on March 1.
"We strongly regret this step [by the US], which appears to represent a blatant intervention to protect the US domestic industry and [does not appear] to be based on any national security justification," EC president Jean-Claude Juncker said immediately after the US announcement.
“Protectionism cannot be the answer to our common problem in the steel sector. Instead of providing a solution, this move can only aggravate matters. The EU has been a close security ally of the US for decades - we will not sit idly [by] while our industry is hit with unfair measures that put thousands of European jobs at risk," he said. “The EU will react firmly and commensurately to defend our interests. The EC will bring forward in the next few days a proposal for [World Trade Organization]-compatible countermeasures against the US to rebalance the situation."
Trump chose the most disruptive option among those recommended by Commerce Department Secretary Wilbur Ross by setting a tariff instead of a quota that would have allowed close US trade partners and allies - including EU countries - to maintain their traditional presence in the US market, Eurofer said.
"From one day to the next, EU steel exports to the US - which were at 5 million tonnes in 2017 - will be cut drastically, by an estimated 50% or more,” Eggert said. “The same will happen with all other countries exporting steel to the US. We expect the tariff [will] restrict US imports by up to 20-25 million tonnes overall.”
The original proposal included two alternative approaches to the trade measures: a global quota of 63% of 2017 import levels or a duty of 24% applied to all countries and possibly to all steel products; or a country-specific alternative that would see tariffs on steel from 12 countries, with all other countries limited to 100% of their 2017 shipments to the US.
"In the current context of massive global excess steel capacity, markets will be forced to take preventive contingency actions to avoid domestic market disruption from trade deflection," Eggert said.
The approval of Section 232 measures threatens the European steel market with a reduction in exports and the growth of redirected import flows, market sources told Metal Bulletin after the proposed measures were released in February.