Trade dispute escalates - punitive tariffs on aluminum and steel against EU countries
US government enforces punitive tariffs
A majority of economists have already seen the US government's announced protective tariffs on aluminum and steel imports as a foregone conclusion, and few market participants were surprised by the definitive introduction of these protective tariffs. The OECD ministerial meeting has made the last attempts to persuade the Americans of a permanent exception to these measures, but this latest attempt also failed. So it was only a matter of time before Trade Minister Wilbur Ross will announce the decision to levy the protective tariffs.
Earlier, Ross insisted that the decision would be communicated based on stock market opening hours, so that there would be no major fluctuations in the financial markets. However, this agreement was disregarded, so Ross only a few hours before the end of the exception, which was valid until June 1, before the press and announced the tariffs. Affected are the EU, Canada and Mexico . However, Ross has already announced that the US would look forward to constructive negotiations with the respective states.
EU countervailing duties could apply from 20 June
The EU also announced immediate countermeasures. Trade Commissioner Cecilia Malmström also noted that this decision was particularly bad for world trade. As a result of the American measure, the EU states were forced to bring the current case before the WTO and also to impose countervailing duties . According to Jean-Claude Juncker, the interests of the Member States are defended above all by the levying of their own customs duties. The tariffs should comply with the guidelines of the WTO. The severity of customs duties is particularly dependent on whether the US government grants domestic companies scope to import steel and aluminum products. Because they can make a request to the government if they are particularly dependent on EU products and thus obtain a reduction in tariffs. According to Brussels, in just a few days clarity on the extent of the punitive tariffs will exist.
Regardless, the planned counter-duties might take some time before they come into force. The EU has already submitted the planned countermeasures to popular US export hits at the WTO. However, based on WTO rules, they can not be activated until June 20 at the earliest. According to Heiko Maas, the measures of the US are to be classified as unlawful. History has already shown that trade conflicts do not know any winners, so the German government will continue to campaign for open and multilateral trade. Above all, the reasons of national security are described as untenable.
German economy criticizes the steps of the US government
Above all, the German economy expressed harsh criticism. According to Ingo Kramer, the employer's president, this approach marks a turning point in transatlantic trade. Trump's actions could also set in motion a dangerous spiral of protectionism. The only logical consequence is a common approach. There would be no winners. But it will particularly affect American consumers, European companies and the entire production site USA . Moreover, the entire EU represents a stronger economy than the US, so there would be no reason to accept the capitalized measures. Above all, Angela Merkel called for a joint approach, with a de-escalation in the focus of governments.
Experts consider the impact on the duties imposed to be manageable for German industry. First calculations show that only 40 million euros could be lost in the context of GDP. However, if Trump increases tariffs on cars from 2.5 to 27.6 inches , the German economy would lose around five billion euros per year. This step should be avoided. For this purpose, bilateral negotiations are being conducted with the USA.