EU vows to retaliate as US sanctions on steel come into force

The European Union has vowed to retaliate against sanctions imposed by the United States on steel and aluminium imports, while the Department of Enterprise warned that Irish companies will be directly and indirectly affected by the decision.

The US commerce department confirmed on Thursday that tariffs of 25 per cent will be placed on steel imports from Friday, with a 10 per cent levy on aluminium, sparking fears of a transatlantic trade war.

The EU had secured a temporary exemption from the tariffs when they were announced in March. But US commerce secretary Wilbur Ross said on Thursday that talks with the EU had not made sufficient progress in trade discussions to merit an exemption ahead of a June 1st deadline.

The levies will also be placed on Canadian and Mexican metal imports, complicating ongoing talks on Nafta, the North American Free Trade Agreement between the US, Mexico and Canada.

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The new tariffs are due to go into effect at midnight on Thursday.

Furious response

While EU trade commissioner Cecilia Malmstrom had indicated last week that she was not hopeful of securing a permanent exemption, the development still prompted a furious response from Brussels.

"This is not the way we do business," European Commission president Jean-Claude Juncker said, warning of counter-measures. The commission has also referred the US to the WTO in a bid to declare the US measures illegal.

Minister for Business Heather Humphreys, who met Mr Ross in Washington last month, said she was "deeply disappointed" by the decision, and underlined the Government's support for any countermeasures adopted by the European Commission to protect the EU's commercial interests.

"Ireland, along with the rest of the EU member states, believes these unilateral US tariffs are unjustified and at odds with World Trade Organisation rules," she said, noting that the EU had tried to engage with the US to jointly address the problem of overcapacity in the steel sector.

The Aughinish Alumina plant in Limerick, owned by Russian giant Rusal, is among the businesses expected to be hit by the tariffs, given that it supplies alumina to some of Europe's biggest aluminium users.

Challenges

In addition, the plant is facing separate challenges following the US decision to put the Russian billionaire Oleg Deripaska on its Russian sanction list earlier this year. The US Treasury has since softened its stance, agreeing to revisit the matter if Mr Deripaska cuts his shareholding in Rusal's parent company En+ below 50 per cent and appoints independent board members.

You don't treat allies the same way you treat opponents. Blanket protectionism is a big part of why we had a Great Depression

Greg Barker, the chairman of En+, met Ms Humphreys on Thursday in a bid to secure Government support for the issue. He told Reuters that the company has until mid-summer to come up with a plan to satisfy US authorities.

Criticism of the Trump administration's tariff announcement was not confined to Europe. Several prominent Republicans criticised the measure. "You don't treat allies the same way you treat opponents," tweeted Senator Ben Sasse. "Blanket protectionism is a big part of why we had a Great Depression. 'Make America Great Again' shouldn't mean 'Make America 1929 Again'."

US stock markets fell on the news, though steel and aluminium stocks strengthened. The dollar strengthened against the euro.