(Bloomberg) -- The European Union steel industry may come out on top of EU carmakers in a fight over possible curbs on the bloc’s imports of the metal, the latest evidence of the domino effect caused by U.S. President Donald Trump’s protectionism.
European trade chief Cecilia Malmstrom 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 U.S. as a result of its 25 percent 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 AG are pressing for import restrictions to limit the risk of a slump in domestic prices, European auto producers are warning against such a move. Malmstrom 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 to have provisional measures in place,” she told reporters on Tuesday in Brussels. “I would say mid-July could be some provisional 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 U.S. steel tariff and to a 10 percent levy on foreign aluminum that Trump also imposed in March on national-security grounds.
After losing a temporary waiver from the U.S. levies on June 1, the bloc filed a complaint at the World Trade Organization and imposed tit-for-tat tariffs on 2.8 billion euros ($3.3 billion) of U.S. goods imported into Europe including Harley-Davidson Inc. motorcycles, Levi Strauss & Co. jeans and bourbon whiskey.
The main European car-industry lobby group said on Tuesday it had joined forces with other users of steel -- including the construction equipment, farm machinery, home appliance and technology sectors -- to urge Malmstrom 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 emailed statement in Brussels. The alliance of users has appealed to Malmstrom in a letter, according to the auto group, which represents producers such as Volkswagen AG, Daimler AG, Renault SA and Fiat Chrysler Automobiles NV.
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 percent -- or 22 billion euros -- of the EU’s annual iron and steel imports.
The probe can lead to tariffs as well as quotas on EU imports of the products covered from all countries. Malmstrom declined to comment about what type of safeguard measures would likely emerge.
Regarding the trans-Atlantic trade dispute generally, Malmstrom said the EU hasn’t been in talks with Washington since losing the exemption from the metal levies and the U.S. 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 U.S. as a result of the EU’s tit-for-tat levy of 25 percent on U.S. 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,” Malmstrom 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.”’
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