A stainless steel product line is seen at a factory. Picture: REUTERS
A stainless steel product line is seen at a factory. Picture: REUTERS

Brussels — The EU steel industry may come out on top of EU car makers in a fight over possible curbs on the bloc’s imports of the metal, the latest evidence of the domino effect caused by US President Donald Trump’s protectionism.

European trade chief Cecilia Malmström said the EU could limit its imports of steel from around the world within weeks. The aim would be to prevent the European market from being flooded by shipments diverted away from the US as a result of its 25% steel tariff, which Trump imposed in March on national-security grounds dismissed by the EU and other countries.

While EU-based steel manufacturers such as ArcelorMittal and Thyssenkrupp are pressing for import restrictions to limit the risk of a slump in domestic prices, European automotive producers are warning against such a move. Malmström has opened an inquiry that is due to be completed by year-end and that, in the meantime, allows for the introduction of provisional import limits.

"We are seriously contemplating having provisional measures in place," she told reporters on Tuesday in Brussels. "I would say [by] mid-July [we] could be some provisional measures."

Safeguard measures

The European probe into possible "safeguard" curbs on imported steel marks the defensive part of a three-pronged EU strategy for responding to the US steel tariff and to a 10% levy on foreign aluminium that Trump also imposed in March on national-security grounds.

After losing a temporary waiver from the US levies on June 1, the bloc filed a complaint at the World Trade Organisation (WTO) and imposed tit-for-tat tariffs on €2.8bn of US goods imported into Europe, including Harley-Davidson motorcycles, Levi Strauss jeans and bourbon whiskey.

The European probe into possible "safeguard" curbs on imported steel marks the defensive part of a three-pronged EU strategy for responding to the US steel tariff

The main European car-industry lobby group said on Tuesday that it had joined forces with other users of steel — including the construction equipment, farm machinery, home appliance and technology sectors — to urge Malmström to refrain from imposing EU curbs on imports of the metal.

"It is vital for the industries concerned to have the ability to procure raw materials and semi-finished products of good quality at competitive prices," the European Automobile Manufacturers’ Association said in an e-mailed statement in Brussels. The alliance of users has appealed to Malmström in a letter, according to the automotive group, which represents producers such as Volkswagen, Daimler, Renault and Fiat Chrysler Automobiles.

Talks on ice

The safeguard investigation covers 26 types of steel ranging from stainless hot-rolled and cold-rolled sheets to rebars and railway material. Together, the products account for 40% — or €22bn — of the EU’s annual iron and steel imports. The probe can lead to tariffs as well as possible quotas on EU imports of the products covered from all countries. Malmström declined to comment about what type of safeguard measures would likely emerge.

Regarding the trans-Atlantic trade dispute generally, Malmström said the EU hasn’t been in talks with Washington since losing the exemption from the metal levies and the US can expect more retaliation by the bloc should Trump make good on a threat to impose automotive tariffs on national-security grounds.

Meanwhile, she said, an announcement by Harley-Davidson that it’ll move some production outside the US as a result of the EU’s tit-for-tat levy of 25% on US motorbikes, fits in with Europe’s goal of making the Trump administration pay a political price for its unilateralism on trade.

"There has to be consequences if you do not respect international global rules," Malmström said. "The consequences are that the American companies and the American business and American consumers, whom we don’t want to punish, but that is the unfortunate consequence, that they will react and that they will put pressure on the American administration, to say ‘Hey, hold on a minute — this is not good for the American economy’."

Bloomberg