Trade tariffs: Deadline looms on US exemption for EU

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The EU had a temporary exemption to steel and aluminium tariffs but that runs out on 1 May

EU Trade Commissioner Cecilia Malmstrom is to hold last-ditch talks with her US counterpart aimed at exempting the 28-nation bloc from President Donald Trump’s steel and aluminium tariffs.

The EU says it expects a “permanent and unconditional” exemption to replace a temporary measure that runs out on 1 May.

If that fails, it will launch a series of countermeasures.

Germany’s Angela Merkel met Mr Trump on Friday but no breakthrough was reached.

“For the time being our priority is the ongoing high-level dialogue to secure a permanent exemption,” the trade commissioner said, appealing for the EU and US to work together.

A European Commission spokesman said on Monday that the EU was “patient but also prepared”.

US Commerce Secretary Wilbur Ross, who will discuss the tariffs with Ms Malmstrom ahead of a midnight deadline (0500 BST Tuesday), has indicated some US allies will be given last-minute exemptions if they accept a quota of US imports, but not all.

Who is hit by Trump trade tariffs?

President Trump’s tariffs of 25% on steel and 10% on aluminium came into effect in March.

China has already been hit, retaliating with its own duties on US imports such as pork, fruit and wine. Mr Trump has responded by calling for further US tariffs.

Canada and Mexico were given exemptions while talks took place over Nafta (North America Free Trade Agreement), along with South Korea, Argentina, Australia, Brazil and the EU.

South Korea was given an indefinite exemption in return for a 30% cut in its steel exports to the US. The other exemptions run out on 1 May.

But President Trump has set his sights on EU exports, and German carmakers in particular.

What happens without a deal?

President Trump had visits from both Chancellor Merkel and President Emmanuel Macron of France last week but gave no indication of what would happen. In Mrs Merkel’s words, “the president will decide; that is very clear”.

On Sunday, the two leaders discussed the 1 May deadline with UK Prime Minister Theresa May and issued a statement making clear “the EU must be ready to react, if necessary, with efficiency and speed”.

The EU refused to discuss on Monday how quickly it would respond if the US refused to exempt the bloc from the trade tariffs.

But Ms Malmstrom has already outlined a draft list of US products that could be hit, including Levi jeans, peanut butter, cranberries, orange juice and bourbon. That list amounts to some €2.8bn (£2.5bn; $3.4bn) of imported goods, while the EU exports some €6.4bn worth of steel and aluminium to the US.

An estimated 320,000 workers across the EU are employed in the steel industry and the steel association Eurofer says President Trump’s threat of trade tariffs has already led to a steep surge in steel imports into the EU.

Is there a solution?

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President Trump met Angela Merkel on Friday but there was no sign of a breakthrough on trade tariffs

The European Commission has said only that it is prepared for a busy 1 May, whatever happens.

An unconfirmed report in German media said the US commerce secretary was looking for a real-terms cut in EU steel and aluminium exports to the US, which would amount to 90% of the level in 2016/17. That was turned down by the Commission as unacceptable, according to Frankfurter Allgemeine Zeitung.

Germany Economy Minister Peter Altmaier called for a concrete offer to the US while German transatlantic co-ordinator Peter Beyer was downbeat about a potential exemption, saying “we should not put too much hope in that”.