EU steelmakers condemn US tariffs

European steelmakers today condemned the US decision to impose duties of 25pc and 10pc, respectively, on imports of EU steel and aluminium from 1 June, calling for the swift introduction of EU safeguards in order to protect the region from an influx of diverted steel trade.

The decision to impose the blanket Section 232 tariffs on the EU from 1 June was widely expected, but industry groups and EU officials had nonetheless continued to seek an alternative deal, with bilateral talks continuing as recently as yesterday.

"We did everything to avoid this outcome," EU trade commissioner Cecilia Malmstrom said, adding that throughout talks the US has "sought to use the threat of trade restrictions as leverage to obtain concessions from the EU." The commission will now trigger a dispute settlement case at the World Trade Organisation, and is preparing a "proportionate" response in the form of rebalancing measures, she said, pledging to take any necessary steps to protect the EU market from trade diversions caused by the US restrictions.

European steel associations are condemning the tariffs, with president of the German Steel Federation Hans Jurgen Kerkhoff today describing the US argument of national security as "grotesque". Director of industry association UK Steel Gareth Stace warned that the US has potentially started a damaging trade war, but urged EU and US officials to continue discussions in an attempt to reach a future agreement that works for all parties.

"It is difficult to see what good can come of these tariffs. US steel consumers are already reporting price increases and supply chain disruption, and with some half a billion dollars of steel exported from the UK to the US last year, UK steel producers are going to be hit hard," Stace said.

Industry groups are particularly concerned about seaborne steel being diverted away from the US and towards the EU, warning that the EU currently does not have sufficient trade defence measures in place to stem the flow. "The EU needs to act swiftly in its own interest to defend the internal market from the Section 232 effect, which is the impact of steel deflected from the US border to the largest open steel market in the world — Europe's," Eurofer's director general Axel Eggert said.

The EU already has a safeguard investigation underway, and market participants are keen for it to deliver robust and effective tools. There cannot be country exclusions if the safeguard is to function, Eggert said. But he added that the purpose is not to exclude imports, rather it is a "preventative remedial action against the threat posed by import surges".

Safeguard measures should be country specific, include all tested products and be effective, Kerkhoff said.

EU steel imports rose by 8.4pc year on year in January-April, almost certainly owing to the Section 232 effect, Eurofer noted, adding that 2017 had already represented a "high-water mark" for the region's imports.

Canada and Mexico will also lose their temporary exemption from the blanket tariffs as of tomorrow. Mexico's ministry of economy today expressed its regret at the decision, calling the US argument of national security justified. Mexico now plans to impose equivalent measures on imports of various US products including flat steel, to remain in force until the US eliminates the Section 232 tariffs.