Trump to remove tariff exemption from EU, Canada, Mexico

Virginia Carson
May 31, 2018

The second exemption was set to expire on Friday.

Imposition of tariffs on European steel and aluminium imports could provoke retaliatory tariffs and inflame trans-Atlantic trade tensions.

President Donald Trump imposed a 25 per cent tariff on steel imports and a 10 per cent tariff on aluminium in March, but granted temporary exemptions to the European Union and five other countries.

The EU said from the outset it wouldn't make trade concessions to the Trump administration to gain a permanent exemption.

The impact of tariff threats is being felt in the USA too, given the amount of steel Canada exports south of the border and the large quantity of other goods purchased from various states.

Le Maire repeated that the European Union would take "all necessary measures" to respond if the United States made a decision to impose tariffs.

But European officials are increasingly irritated by Trump's aggressive use of obscure provisions in USA trade laws against US allies.

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At time of writing Mexico had also announced tariffs on American pork bellies, grapes, apples and flat steel. Party operatives told CNN Thursday that they are fretting the ramifications of more trade talk, anxious that those countries could respond by targeting key USA exports, many of which come from districts that could decide the balance of the House in November.

Besides the USA steel and aluminum tariffs, the U.S.is also investigating possible limits on foreign cars in the name of national security. Virtually no one believes that the national-security argument holds water, and Canadian foreign minister Chrystia Freeland mocked it in remarks to reporters Wednesday.

While shares of Canadian steel firms headed lower, their US counterparts got an initial boost before giving back some of their initial gains.

European Commission President Jean-Claude Juncker, who will be at the G7 table with the seven other country leaders, expressed strong opposition to Thursday's decision.

"The UK Government must support EU safeguards to protect our industry and ensure more dumped steel does not end up on European shores".

Trump's announcement lifted American steel and aluminum stocks because those companies stand to benefit from penalties against their foreign competitors.

Noting that Canada purchases more US steel than any other nation, Trudeau lambasted the Trump administration for initiating the tariffs under the guise of confronting a threat to national security.

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USA and European officials held last-ditch talks in Paris on Thursday to try to avert a deal, though hopes are low and fears of a trade war are mounting.

Commerce Secretary Wilbur Ross said the president acted on national security grounds, seeing a rising tide of imports as a threat to the domestic metals industry.

Worries about a United States trade war with the European Union weighed on Wall Street stocks. "This is protectionism, pure and simple".

Malmström added the EU's response will be "proportionate and in accordance with WTO rules", and the "US measures clearly go against agreed global rules".

"We take the view that without a strong economy, you can't have strong national security", he said.

Trump announced worldwide steel and aluminum tariffs in March but granted exemptions to some major trading partners.

He said the tariffs will in the long run increase the cost of global beer production but have a disproportionate impact on American brewers and jobs.

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