Europe Demands Permanent Waiver From U.S. Metal Tariffs

(Bloomberg) -- European Union leaders demanded a permanent EU exclusion from U.S. President Donald Trump’s metal-import tariffs and kept alive a threat to retaliate, highlighting persistent risks of a trans-Atlantic trade war.

Citing national security, Trump on Friday imposed duties of 25 percent on steel and 10 percent on aluminum while granting a five-week waiver to the EU, Canada, Mexico, Brazil, Argentina, Australia and South Korea. An exclusion for those countries beyond May 1 will depend on the status of “discussions of satisfactory long-term alternative means to address the threatened impairment to U.S. national security,” the White House said.

French President Emmanuel Macron reacted by dismissing the idea of talks “while there’s a gun pointed at our head.” The EU leaders as a whole released a sharply-worded statement expressing “regrets” that Trump imposed the metal tariffs at all, saying the measures fail to address the root problem of overcapacity and insisting Europe has already offered the U.S. “full cooperation” to help re-balance the global market.

“These measures cannot be justified on the grounds of national security, and sector-wide protection in the U.S. is an inappropriate remedy for the real problems of overcapacity,” the bloc’s 28 heads of government or state said in the statement released on Friday in Brussels.

Tit-for-Tat Response

The EU has spent the past several weeks scrambling for a waiver from the U.S. metal tariffs while warning that a failure to gain one would lead to a tit-for-tat response on 2.8 billion euros ($3.5 billion) of imports of U.S. goods including Harley-Davidson Inc. motorcycles, Levi Strauss & Co. jeans and bourbon whiskey.

The EU also said that, without an exemption, it would file a complaint to the World Trade Organization against the Trump administration and introduce “safeguard” actions to prevent metal shipments from other parts of the world to America from being diverted to the European market and flooding it. China announced it would complain to the WTO after failing to win any exclusion from the U.S. metal levies.

Macron signaled a readiness to discuss U.S. trade concerns while expressing annoyance at the May 1 deadline on whether the waiver will be prolonged.

“As a matter of principle, we will talk about everything with a friendly country that respects WTO rules,” Macron told reporters after the summit. “But, by the same principle, we won’t talk about anything while there’s a gun pointed at our head.”

Too Tight

Jean-Claude Juncker, president of the European Commission, which secured the temporary exclusion and will form a working group with the U.S. to discuss the conditions for a longer exemption, said the five-week timetable is too tight.

“It seems to me highly impossible to cover all the issues we have to discuss with our American partners from now to May 1,” Juncker said.

The statement by EU leaders cites the bloc’s right “to respond to the U.S. measures as appropriate and in a proportionate manner.” It also “takes note that shipments of steel and aluminum from the European Union have been temporarily exempted from such measures, and calls for that exemption to be made permanent.”

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