Europe threatens tax retaliation if steel, aluminium not exempted from US 232 import tariffs

The European Commission (EC) will set a 25% safeguard duty on steel and aluminium imported from the US from June 20 this year if the EU is not exempted from Section 232 tariffs.

The EC will only apply the measures if the World Trade Organization (WTO) approves the move. The duties will affect a number of US products, including steel and aluminium.

If applied, the measures will be enacted in two stages. In the first step, ad valorem duties of 25% on products -- including US steel and aluminum imports -- will be imposed from June 20 until the US lifts a 25% measure on European steel imports and 10% on aluminum imports.

The second stage will see ad valorem duties on an expanded range of products of 10%, 25% and 50% from March 23, 2021.

In late April, the US authorities postponed until June 1 the imposition of tariffs - arising from the country’s Section 232 trade investigation - on steel and aluminium imported from the EU, Canada and Mexico. The threatened 25% tariff on steel arises from the country’s Section 232 trade investigation.

Both the EC and European steel association Eurofer claim that the decision to extend Europe’s exemption from Section 232 tariffs only serves to prolong the uncertainty in the market and believe the EU should be permanently exempted from the tariffs.

The US safeguard measures “are capable of having a considerable negative economic impact on the [European] Union industries concerned. They would significantly limit [EU] exports of steel and aluminium products... to the US, [which were] worth at least €6.41 billion ($7.55 billion) in 2017, of which €5.30 billion [was] steel [and] €1.11 billion aluminium,” the EC said.

The EU exported 3.16 million tonnes of carbon steel to the US in 2017, while the EU imported only 101,160 tonnes of steel from the US last year, according to Eurofer statistics.

The EC started a safeguard investigation into 26 steel products on March 26 this year, with the intention of shielding the region’s steel industries from the effects of a possible surge in shipments being redirected to Europe from the US because of the Section 232 import tariffs.

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