Global Geopolitical Series: EU confirms retaliation against U.S. tariff to be live from July

In a statement released by the European Commission, the European Union has confirmed retaliation against U.S. metal tariffs which became live this month. The Trump administration has so far imposed 25 percent tariffs on all steel imports to the United States, and 10 percent tariff on Aluminum imports. The United States’ closest neighbor Mexico has already announced retaliation to the tune of 20 percent on several key U.S. imports such as pork meat, steel, cheese, and fruits. Now, the EU has announced its plan of retaliation, which will go live from July, unless an agreement is reached with the United States.

According to the statement, WTO safeguard agreement allows for a rebalancing corresponding to the damage caused by the US measures with EU exports worth €6.4 billion being affected. Hence, EU exercises its right and imposes tariffs on several U.S. goods valued at €2.8 billion. The Commission added that its right to exercise further tariffs on rest of the €3.6 billion is stored for a later date. It says that today’s announcement is “a part of the three-pronged response outlined by the European Commission, that includes the launch of legal proceedings against the US in the WTO (on 1 June) and the possible triggering of safeguard action to protect the European market from disruptions caused by the diversion of steel from the United States market.”

Here is the full list of products and possible tariffs, http://trade.ec.europa.eu/doclib/docs/2018/may/tradoc_156909.pdf

Mexico’s tariff action earlier this week, strongly suggested that the threat of a trade war is real and the EU’s action confirms that the genie is out of the bottle and won’t go back easily.