EU Braces for U.S. Metal Curbs as Hopes Fade for Trump Relief

(Bloomberg) -- European Union Trade Commissioner Cecilia Malmstrom gave her clearest signal yet that the EU will come up short in its bid for a permanent, unconditional waiver from U.S. metal tariffs that President Donald Trump imposed on national-security grounds.

Speaking just days before a temporary waiver for the EU from the duties expires, Malmstrom said the bloc would likely face U.S. import quotas on European steel and aluminum should the Trump administration opt against triggering the levies on June 1.

“Realistically, if the U.S. decides to refrain from applying duties, I expect them nonetheless to want to impose some sort of cap on EU exports,” she told the European Parliament on Tuesday in Strasbourg, France. “The question is whether that would be a hard cap -- meaning volume limits above which no further EU exports would be possible -- or a soft cap, under which further exports would be possible but under duties.”

The EU has been seeking to translate political pledges to stand up to Trump’s protectionism into policy proposals that both threaten retaliation and offer routes away from any economically damaging trans-Atlantic trade war. Since Trump introduced the tariffs on March 23 while temporarily exempting some trade partners including the EU, Germany has sounded a softer tone than have other member countries including France.

‘Less Damaging’

Malmstrom said that a soft U.S. cap “would be less damaging” while repeating EU threats to complain to the World Trade Organization and impose a retaliatory tariff on 2.8 billion euros ($3.2 billion) of American goods imported into Europe as soon as June 20. She said the details of the upcoming U.S. decision will determine the EU’s response.

“Our future course of action will depend on the nature and the severity of measures imposed on our exports by the United States and the injury it does to our industry,” she said.

“Restrictive quotas” by the U.S. would prompt the European Commission, the EU’s executive arm in Brussels, to prepare for “immediate” retaliation, Malmstrom said. Among the U.S. goods that would be hit initially by a 25 percent European levy are Harley-Davidson Inc. motorcycles, Levi Strauss & Co. jeans and bourbon whiskey, with the EU reserving the right to target more American products with further duties at a later stage.

Malmstrom said a meeting that she is scheduled to have with U.S. Commerce Secretary Wilbur Ross in Paris on Wednesday will be “an important moment” while repeating that Trump will take the ultimate decision on whether to apply the tariffs of 25 percent on steel and 10 percent on aluminum against the EU.

“It is clear that the final decision will be made by President Trump himself,” she said. Malmstrom warned against divisions within the 28-nation bloc, saying “it is important at this moment that the European Union stands united.”

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