8 Mar 2018

US juice and peanut butter face new EU tax

7:16 am on 8 March 2018

The EU has condemned US plans for tough tariffs on steel and aluminium imports, saying they jeopardise European jobs.

A Chinese worker at a steel mill in Hefei, in eastern China's Anhui province.

A Chinese worker at a steel mill in Hefei, in eastern China's Anhui province. Photo: AFP

EU trade commissioner Cecilia Malmstrom set out plans to retaliate against the proposed US tariffs.

These include higher import duties on bourbon, peanut butter, cranberries, orange juice, steel, and industrial products, she said.

On Tuesday, Donald Trump's top economic advisor Gary Cohn, who opposes tariffs, resigned.

That was after Mr Trump said EU trade rules make it "impossible" for US firms to do business with the bloc.

Ms Malmstrom said the US justification for the proposed 25% tariff on steel imports and 10% on aluminium imports was that US national security is threatened.

"We have serious doubt about that justification. We cannot see how the European Union, friends, and allies in Nato, can be a threat to national security in the US," she said.

"We find that assumption deeply unjust."

Ms Malmstrom said the EU will launch proceedings at the World Trade Organisation with other members of the organisation. It would take measures to try to deal with an expected surge of steel and aluminium imports into the EU.

"From what we understand, the motivation of the US is an economic safeguard measure in disguise, not a national security measure," she said.

The EU would take measures that match the economic loss suffered by the EU.

"We are discussing different US products on which different import tariffs can be imposed," she said.

She added that the root cause of the problem with steel and aluminium is "global overcapacity" propped up by "massive state subsidies... under non-market conditions."

Ms Malmstrom said: "We have made clear that if a move like this is taken, it will hurt the European Union. It will put thousands of European jobs in jeopardy, and it has to be met by a firm and proportionate response."

The EU is a major exporter of steel to the US, along with Canada and South Korea.

Ms Malmstrom said the EU was "intensively talking" to US counterparts to try to persuade Washington "to have a rethink".

"A trade war has no winners," she added.

EU president Donald Tusk said: "There is a risk of a serious trade dispute between the United States and the rest of the world, including the EU.

"President Trump has recently said, and I quote, 'Trade wars are good and easy to win'. But the truth is quite the opposite. Trade wars are bad and easy to lose," he said.

One of Mr Trump's campaign promises was to reinvigorate the US steel industry.

"Just like the American steel from Pennsylvania that built the Empire State Building, it will be American steel that will fortify America's crumbling bridges," he said at a 2016 campaign rally.

Mr Trump and his supporters have focused their ire on cheap Chinese steel, which they blame for problems in the US steel industry.


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