Trump's Steel Tariff Prompts EU to Probe Global Trade Diversion

(Bloomberg) -- The European Union took the first step toward protecting EU-based steel manufacturers such as ArcelorMittal and Thyssenkrupp AG from any surge in imports resulting from a controversial new U.S. tariff.

The European Commission opened a “safeguard” probe into whether the 25 percent levy on foreign steel imposed last week by U.S. President Donald Trump on national-security grounds is diverting worldwide shipments to the EU market.

The inquiry 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 percent -- or 22 billion euros ($27.3 billion) -- of the EU’s annual iron and steel imports, according to the commission, the bloc’s executive arm in Brussels.

“The investigation will determine whether, as a result of unforeseen developments, the products concerned are being imported into the union in such greatly increased quantities and/or on such terms or conditions as to cause, or threaten to cause, serious injury to the union producers,” the commission said on Monday in the Official Journal. The commission has nine months to decide whether to impose tariffs and/or quotas on EU imports of the products covered from all countries.

The probe marks the defensive part of a three-pronged strategy that the EU has drawn up to respond to the U.S. steel tariff and to a 10 percent levy on foreign aluminum that Trump also imposed on March 23 on national-security grounds.

While the EU is among countries to which the White House gave a waiver from the duties until May 1, the bloc is demanding a permanent exemption and threatening without one to impose tit-for-tat tariffs on 2.8 billion euros of imports of U.S. goods and to file a complaint at the World Trade Organization.

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