By Eamon Quinn
The EU will likely retaliate in kind after US President Donald Trump carried through on his threat to impose tariffs on US imports of steel and aluminium tariffs, escalating the risk of of a global trade war.
Irish exports into the US may escape for the time being but there is a high degree of uncertainty over how the spat will develop, as the EU prepares to retaliate by matching the the US tariffs, said John Whelan, a leading consultant on Irish exports and imports.
“I think that there will be a strong reaction from the EU — it would be the only sensible political reaction. It is only a question of how big the response will be. Brussels has warned in recent months that its reaction would be very strong,” Mr Whelan said.
The US metals tariffs are designed to help shelter smelters in the US from European imports.
But Brussels will try to protect European goods when it draws up its own list. Ireland exports huge amounts of pharmaceuticals to the US, but such goods have in the past been excluded from trade disputes. Imposing sanctions on services such as software would be difficult, Mr Whelan said, though other Irish goods, such as whiskeys, could become embroiled if the dispute were to escalate.
The White House tariffs on steel and aluminium imports from the EU, also include Canada and Mexico.
US commerce secretary Wilbur Ross — best known here as the investor who made tens of millions on his Bank of Ireland investment as the Government sold down its stake in the lender after the crash — told reporters Washington would proceed with plans for a 25% tariff on steel and a 10% tariff on aluminium imports.
“We look forward to continued negotiations, both with Canada and Mexico on the one hand, and with the European Commission on the other hand, because there are other issues that we also need to get resolved,” Mr Ross said.
The tariffs, which have prompted several challenges at the World Trade Organisation, are aimed at allowing the US steel and aluminium industries to increase their capacity utilisation rates above 80% for the first time in years.
Worries about a US trade war with the EU weighed on global shares, but shares of US steel and aluminium makers were up strongly.
Mr Trump’s administration has threatened to impose tariffs on car imports, is engaged in negotiations with China to reduce America’s yawning trade deficit and has said it will punish Beijing for stealing its technology by imposing tariffs on $50bn (€43bn) of imports from China.
Mr Ross himself heads to Beijing today where he will attempt to get firm deals to export more US goods in a bid to cut America’s $375bn trade deficit with China.
German magazine Wirtschaftswoche reported that Mr Trump had told French president Emmanuel Macron he wanted to stick to his trade policy long enough that Mercedes-Benz cars were no longer cruising through New York.
The Trump administration launched a national security investigation last week into car and truck imports, using the same 1962 law that he has applied to curb incoming steel and aluminium.
France’s finance minister Bruno Le Maire had met with Mr Ross yesterday in a bid to end the stand-off over steel and aluminium.
“It’s entirely up to US authorities whether they want to enter into a trade conflict with their biggest partner, Europe,” Mr Le Maire told reporters after the meeting.
Europe did not want a trade war, he said, but Washington had to back down from “unjustified, unjustifiable and dangerous tariffs”. The EU would respond with “all necessary measures” if the US imposed them.
Irish Examiner and Reuters staff