EU will respond to Trump’s tariffs, Moscovici says

President Donald Trump is to press ahead with the imposition of 25% tariffs on steel imports and 10% on aluminum, although he said he was willing to strike a deal that could exempt Canada and Mexico.

Washington has repeatedly offered relief from steel and aluminum tariffs to countries that “treat us fairly on trade”, a gesture aimed at putting pressure on Canada and Mexico to give ground in separate North American Free Trade Agreement (Nafta) talks, which appear to be stalled.

“I’m sticking with 10 and 25 (per cent) initially. I’ll have a right to go up or down, depending on the country, and I’ll have a right to drop out countries or add countries,” he told reporters at the beginning of a Cabinet meeting at the White House.

The range of potential exemptions for allies and for industries has made the final outcome unpredictable. The president said he was pleased with progress in the Nafta talks, although he again said he would still be willing to terminate the agreement, a threat he has made since he started running for office.

Few observers share President Trump’s rosy view of the Nafta talks, which they say have made little progress since they started six months ago and are stalled over issues such as autos, an industry whose contribution to the US, Mexican and Canadian economies far outweighs that of steel and aluminum production.

In addition to exemptions, there could be a consultation period that would lead to intense lobbying by industry and a growing group of disgruntled Republican lawmakers who oppose the tariffs proposed by the president, a fellow Republican.

Talk of tariffs has raised the prospect of a global trade war and hit stock markets hard. Both the EU and China have said they would retaliate against action by the US, as have Mexico and Canada.

“If Donald Trump puts in place the measures this evening, we have a whole arsenal at our disposal with which to respond,” said European Financial Affairs Commissioner Pierre Moscovici. Countermeasures would include European tariffs on US oranges, tobacco and bourbon, he said. Harley Davidson motorcycles have also been mentioned, targeting House of Representatives Speaker Paul Ryan’s home state of Wisconsin.

Speaking before President Trump made his remarks, Canadian Prime Minister Justin Trudeau said there was a “level of confidence” that the country’s close relationship with the US will protect it from US tariffs. Mr Trudeau’s negotiators in the Nafta talks have rejected the American proposals to link the tariffs and the trade talks, and an attempt by Washington to split Canada and Mexico has also been rejected. Even as President Trump threatened tariffs and his Nafta partners, 11 nations gathered in Chile to sign a landmark Asia-Pacific trade pact, one that President Trump withdrew from on his first day in office in January last year.


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