In Steel Retaliation, EU Targets Kentucky Bourbon

In order to target for retaliation over Donald Trump’s plans to invoke national security concerns to limit steel imports, EU officials have begun assembling a list of US goods including whiskey, orange juice and dairy products.

the tensions set off by the US president’s threat to impose new tariffs or quotas on steel — which analysts say could provoke a new trade war, was highlighted in the EU’s contingency plans, which have emerged as Mr Trump and other leaders gather at a G20 summit.

Details of any possible EU retaliation but said Europe would respond to any US steel sanctions was declined by European Commission president Jean Claude Juncker while speaking on Friday at the summit in Hamburg.

“Our mood is increasingly combative,” Mr Juncker said as he indicated Brussels would react to Washington not in months but “days”.

Under a 1962 law that allows such measures on national security grounds, Mr Trump has promised for weeks to crack down on steel imports.

Agriculture and other politically sensitive products are at the focus of EU officials in their plans for retaliation since the US exports little steel to Europe. Kentucky, the home of Mitch McConnell, the US Senate majority leader, exports bourbon whiskey as one of its main exports and the list includes bourbon whiskey.

Mr Trump’s plans will increase pressure on China and force Beijing to stop flooding global markets with cheap steel, US officials insist.

But as the US has stepped up anti-dumping measures, Chinese steel imports into the US have fallen dramatically in recent years. And likely to bear the brunt of any such move are US allies such as Canada, Germany, Japan and South Korea, as a result.

The bloc’s officials have appealed to Washington to exclude European allies from any crackdown with up to $12bn in EU exports to the US likely to be affected. Similar calls have been made by the governments of other G20 allies, such as Canada, Mexico, Japan and South Korea.

The EU hopes to convince Mr Trump that any unilateral US action on steel would be counterproductive when the two parties meet, one senior EU official expressed hope.

European officials say they are willing to work with the Trump administration to increase pressure on Beijing and the EU shares US concerns about Chinese steel and aluminium.

But the EU official added that “it will be very hard politically to co-operate on those issues if we are not excluded [from the impending sanctions]”.

At the World Trade Organisation, preparations are also being made to challenge a US crackdown by EU officials.

In order to erect trade barriers in times of war, WTO rules allow members to cite a national security exception. But in peacetime, such a move has rarely been made. the precise action taken by the US will decide the nature of any EU retaliation.

Debates on whether to impose a broad tariff on all steel imports or to use quotas and other measures to limit the impact on allies is currently on and the administration is currently engaged in that debate between economic nationalists and a more business-friendly faction.

But the European official said that any measure that restricted EU exports to the US would demand a response and the EU was preparing to retaliate “relatively quickly”.

“The signal that we have been giving is that we are absolutely ready to work with the US on [getting tough with China on steel],” the senior European official said. “If despite that they are willing to do something that hurts us it will raise serious questions about the ability to co-operate with the US on trade.”

(Adapted from CNBC)

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Categories: Economy & Finance, Geopolitics, Strategy

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