US Imposes Tariffs on Steel and Aluminum; EU Considers Retaliation

The United States has imposed tariffs on steel and aluminum imports, potentially impacting trade relations with key partners. President Trump signed executive orders signaling consideration of additional tariffs on automobiles, pharmaceuticals, and computer chips. According to Kevin Hassett, a top economic advisor, steel production is a key component of Trump's promised new age. The measures primarily target Canada, Mexico, Brazil, and South Korea, while Australia has secured an exemption. The EU remains a target, being the largest export market for these metals. Eurofer, the EU steel industry association, warns that the tariffs could cost the EU up to 3.7 million tons of steel exports to the US. They urge Brussels to take immediate action to protect the sector, calling the executive order a radical escalation of the trade war that will worsen the situation for the European steel industry. While European steel producers have benefited from tariff-rate quotas, Eurofer notes that previous tariffs have already reduced EU steel imports to the US by over 1 million tons annually. The US is the second-largest export market for European steel, accounting for 16% of total EU exports in 2024. The association warns that the loss of a significant portion of these sales cannot be compensated by other markets. The tariffs could also cause a shift in trade flows, potentially diverting approximately 23 million tons of steel products imported by the US from third countries (excluding the EU) to Europe, exacerbating overcapacity in the steel market. European steel companies have already closed plants with a total productive capacity of 9 million tons in 2024, resulting in the loss of over 18,000 jobs. Eurofer is calling for key measures from Brussels, including a revision of the EU safeguard regime adopted in 2018. Federacciai, the Italian steel federation, reports that Italian steel exports to the US have more than halved since the initial tariffs were introduced in 2018. The EU is ready to discuss cutting tariffs on autos and other goods to head off a trade war with the U.S., according to EU Trade Commissioner Maros Sefcovic. "Lowering the tariffs, even eliminating the tariffs let's say for industrial products, this is something which we are ready to discuss," Sefcovic said. "Including ready to look at the tariffs for the cars." Trump has cited the EU's value-added tax as the kind of measure he's looking to respond to. He's demanded that the EU lower tariffs for American cars, which are currently at 10%, compared with a 2.5% tariff level in the U.S. But any such move would force the bloc to lower duties for all World Trade Organization members, unless the reduction is part of a formal trade agreement. If the US acts in line with Trump's threats, "we will have no choice but to respond firmly and swiftly," Sefcovic said. The EU has suggested it could buy more liquefied natural gas and weapons from the U.S. But if negotiations fail, the bloc has been preparing to retaliate quickly and proportionally to any U.S. tariffs. German Economy Minister Robert Habeck signaled that Europe could re-apply the kind of duties it imposed on the US during Trump's first term, when he slapped tariffs on nearly $7 billion of European steel and aluminum exports.