Donald Trump’s worldwide tariffs on steel and aluminium imports into the US have come into effect today: a 25% levy “with no exceptions or exemptions”.
The EU followed China’s lead and immediately imposed counter-tariffs. But the UK – which had fervently hoped to be the exception to Trump’s tariff rule – is taking a “pragmatic” approach” to the “disappointing” move. Britain is “rapidly negotiating a wider economic agreement with the US”, and will keep “all options on the table”, said business and trade secretary Jonathan Reynolds.
The US imports about 200,000 tonnes of UK steel a year, making it the country’s second-largest steel export market after the EU. So, despite its current no-counter-tariff stance, the government is facing political pressure, as well as lobbying from the struggling steel industry, to change tack.
What did the commentators say?
The EU has “hit back hard”, said Politico and announced a “two-stage retaliation” targeting €26 billion (£22 billion) in US goods, starting in April, and including “iconic” American products such as bourbon and Harley-Davidson motorbikes. “This matches the economic scope of the US tariffs,” said European Commission President Ursula von der Leyen in a statement this morning. “We deeply regret this measure,” she added. Tariffs are “bad for business, and even worse for consumers”.
The US levies on steel and aluminium will “hit Canada and Mexico the hardest”, said Politico, but the EU, the third largest supplier of steel to the US, will “not survive unscathed”. The bloc clearly “wants to send an unmistakable message that the EU is serious about defending its economic interests”.
The inclusion of Britain in the steel tariffs is certainly a “blow” to Keir Starmer and his new ambassador to the US, Peter Mandelson, said The Independent. The pair had been “negotiating hard” for the UK to be spared. Britain has been “dragged into the US trade war despite claims from Brexiteers” that being outside the EU would protect the country. But the government has so far “resisted” immediate retaliatory action.
That is “not an effective negotiating position”, said Daisy Cooper, deputy leader of the Liberal Democrats. Britain is being “repeatedly kicked by the other side and doing nothing”. We must stand up for British steel and the UK economy “through retaliatory measures”.
These tariffs “couldn’t come at a worse time for the UK steel industry, as we battle with high energy costs and subdued demand at home”, said Gareth Stace, director-general of UK Steel.
But Marco Forgione, director general of the Chartered Institute of Export and International Trade, said the UK’s “pragmatic” response leaves the door open for “positive negotiation, with the potential to secure a trade deal”. By contrast, the EU’s approach will simply “harm business and consumers”.
A series of “tit-for-tat tariffs could easily spiral into an all-out trade war and would do the UK little benefit”, agreed William Bain, head of trade policy at the British Chambers of Commerce.
In that scenario, the US “has the upper hand”, said Karen Karniol-Tambour, of investment management company Bridgewater Associates, in The New York Times. Trump’s view is that America’s large trade deficits (it consumes much more than it produces) are “a threat to national wealth and strength”. It has “more imports to tariff than exports”, and it also “has more to gain” if US companies respond by “bringing supply chains back home”.
As tariffs “ramp up”, those in Europe will “suffer most” because the EU’s most important industries – cars, electrical equipment, appliances – are “exactly those where China has built the biggest advantages” and is “in position to grab the biggest piece” of any available “trade surplus pie”.
What next?
Reynolds warned that Britain “won’t hesitate to respond in the national interest”.
And the European Commission has “left the door open to a deal with Trump”, said Politico. It said it “remains ready to work with the US administration to find a negotiated solution”, adding that its measures “can be reversed at any time, should such a solution be found”.