Steel Tariff Showdown: Trump's Tariff Hike to 50% on Imports - A New War on Trade in Sight?
- Let's get down to brass tacks:
Trump Announces Steel Tariff Hike: Could This Be the Final Straw? - Is Trump's latest steel tariff declaration pushing boundaries too far?
There was a glimmer of hope that the simmering trade war between the EU and the USA might be avoided - but alas, US President Donald Trump has seemingly decided to throw another fuel to the fire. Trump has announced an increase in existing tariffs on steel and aluminum imports from 25% to 50%, despite ongoing negotiations. Is a full-blown trade war now unavoidable? Here are some answers to your burning questions:
What's the deal with this unexpected move?
Given that Donald Trump recently seemed inclined to work towards a mutually beneficial solution to the trade conflict, this sudden shift comes as a surprise. Following a threat of another significant tariff increase notably directed towards the EU just a week ago, Trump agreed to a conversation with EU Commission President Ursula von der Leyen on Sunday. Post the chat, Trump withdrew the threat and hinted at continued negotiations until July 9. The EU Commission welcomed the positive conversation as a fresh impetus.
Several telephone conversations have taken place since then, between trade representatives on both sides, most recently with EU Trade Commissioner Maros Sefcovic speaking with US Trade Minister Howard Lutnick on Friday.
So, how is the EU reacting to this new development?
The EU Commission, in charge of the tariff negotiations, expressed deep frustration on Saturday. The spokesperson stated that the increased tariffs undermine ongoing efforts to resolve the issue through negotiations. The EU is ready to take countermeasures and could do so even before July if necessary.
What could a swift EU response look like?
In April, EU member states paved the way for initial counter-tariffs of between 10% and 25% in response to the new tariffs introduced by US President Donald Trump. These can be implemented immediately and target, among other things, US-made items such as jeans, motorcycles, beef, or citrus fruits. More measures are being considered, potentially including additional duties on industrial and agricultural products like cars, sweet potatoes, and whiskey.
What's Trump's game with these tariffs?
Trump aims to correct perceived trade imbalances and secure domestic production sites with these tariffs. Speaking to employees of a steel factory in Pennsylvania on Friday, he stated that the import fees would strengthen the US steel industry.
Kevin Dempsey, President of the American Iron and Steel Institute, welcomed the doubling of tariffs on steel imports. He pointed out that Chinese steel exports have more than doubled since 2020, and in light of the current international situation, "this tariff measure will help prevent a new surge in imports that would harm American steel producers and their employees."
The tariff revenue is intended to help finance Trump's costly tax cuts, although officially, the existing tariffs on the import of steel, aluminum, and cars are justified by the US government as necessary for national security. The EU challenges this approach and argumentation as incompatible with the rules of the World Trade Organization (WTO).
What's at stake for the EU?
The European steel industry was concerned earlier this year that additional production capacities and jobs would need to be cut due to new U.S. tariffs. The USA was the second-largest export market for European steel producers in 2024, accounting for 16% of total EU steel exports.
Germany's largest steel manufacturer, Thyssenkrupp Steel, however, expressed a certain level of calm at the time. The company in Essen highlighted that its primary market for steel is Europe. Exports of steel products to the USA were insignificant, they said.
Could the EU meet Trump halfway on steel?
In theory, the EU and the USA could agree to jointly combat massive overcapacities on the world market driven by massive subsidies - with China primarily to blame. Companies from the EU are also suffering significantly from dumping prices. The European Commission has therefore created a system of protective measures for the domestic steel industry, which was recently strengthened in the spring.
- EU
- Steel
- Trade war
- Donald Trump
- USA
- U.S. President
- Provocation
- Tariff conflict
- Steel industry
- European Commission
- Aluminum
- Doubling
- Brussels
- Car
- Sunday
- Ursula von der Leyen
- Maros Sefcovic
- Howard Lutnick
The Bottom Line:
The current trade climate between the EU and the USA is marred by considerable economic pressures and retaliatory measures. Although there is no formal announcement about a 50% increase in steel tariffs, the ongoing tensions continue to pose economic challenges.
- Community policy: The European Commission has expressed its readiness to take countermeasures against the increased steel tariffs, indicating a potential shift in the community's trade policy.
- Employment policy: The doubling of steel tariffs by the US may impact the job market in the EU, particularly in the steel industry, as the EU could retaliate with countermeasures on imported goods such as cars and whiskey.
