Published: Mon, July 10, 2017
Entertaiment | By Simon Arnold

Europe 'in battle mood' over Trump's steel threat

Europe 'in battle mood' over Trump's steel threat

The Group of 7 meeting in Sicily shortly thereafter exposed further divisions over policy, and a week later Mr. Trump announced he was pulling the United States out of the landmark Paris agreement on fighting global warming.

The EU is the second largest producer of steel in the world after China.

While tariffs on both products would be aimed primarily at China, U.S. allies fear they will bear the brunt of the measures because Chinese steel exports are already largely subject to U.S. restrictions and Canada and Mexico are likely to be exempt. "It's not just the pricing, it's not just employment", Trump said in April at a ceremony ordering the review. Otherwise, the risk of "bilateral actions" increases, Merkel said.

Global institutions such as the World Trade Organization are premised on the concept that trade is in their members' mutual interest and that they will therefore rarely, if ever, seek exceptions to the rules based on subjective individual claims such as national security - as opposed to measurable violations such as dumping goods below production cost. Hence, the Obama administration imposed trade barriers on Chinese steel, which is one reason China's share of the USA market has been declining of late - though Chinese exporters are suspected of diverting some through cutout firms in Vietnam.

"That hurts us, but it also hurts the Americans", he added.

Trade wars loom as Trump has demanded Germany and China reduce their huge surpluses and threatened other countries with punitive measures in battles over steel, natural gas and hormone-treated beef.

Merkel's deputy, German Foreign Minister Sigmar Gabriel, said Thursday he was anxious that Europe and the US might be heading for a trade war.

"The EU is a traditional and reliable steel supplier of the U.S., the EU member states concerned are North Atlantic Treaty Organisation partners of the U.S. There is therefore no justification for targeting any steel supplies from the EU", Eurofer said.

As the Friday start of the Group of 20 economic summit in Hamburg approaches, the Trump administration represents one of the chief sources of uncertainty in global trade. "Everyone is terrified" that any US measures on steel "would be a unilateral action and would open up the floodgates for other countries to do the same", he said.

Last year, European Union steel producers sold 3.2 million tonnes of steel to the USA, which is the world's largest steel importer.

Several of those exporters-Canada, Turkey, and Germany-are members of the North Atlantic Treaty Organization (NATO) and as such the Trump administration may have to show that their strategic partners in the military alliance are somehow threatening US national security interests.

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