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U.S. tariffs prompt trade threats from EU, Canada, Mexico

By Jessica Domel

Canada, Mexico and the European Union (EU) are threatening new tariffs on American exports following an announcement Thursday the United States will not offer another exemption to a 25-percent tariff on imported steel and a 10-percent tariff on imported aluminum.

U.S. Commerce Secretary Wilbur Ross told reporters the president decided to implement the tariffs due to slow movement in the North American Free Trade Agreement (NAFTA) renegotiation and a lack of significant movement in trade talks with the EU.

“The United States was unable to reach satisfactory arrangements, however, with Canada, Mexico or the European Union after repeatedly delaying tariffs to allow more time for discussions,” a statement from the White House said.

The EU, Canada and Mexico were among the countries who received a temporary exemption on the steel and aluminum tariffs after they were announced in late March. The exemption was set to expire June 1.

According to the White House, the U.S. has reached agreements with Australia, Argentina and Brazil on steel exports to the U.S. Agreements on aluminum sales have been reached with Australia and Argentina.

The tariffs were implemented in March, according to the White House, due to national security concerns and lost jobs over the past few years in the steel and aluminum industries.

“In January 2018, the Department of Commerce delivered two reports on steel and aluminum investigations conducted under Section 232 of the Trade Expansion Act of 1962,” the White House said. “The reports found that the excessive level of imports threatened to impair the national security because further closures of domestic production capacity would result in a situation where the United States would be unable to meet demand for national defense and critical infrastructure in a national emergency.”

After the announcement Thursday, the European Commission issued a statement calling the tariffs “protectionism–plain and simple.”

Commission President Jean-Claude Juncker said overcapacity is at the heart of the issue, and the EU is not the source of it, but will be equally hurt by it.

“By targeting those who are not responsible for overcapacities, the U.S. is playing into the hands of those who are responsible for the problem,” Juncker said. “The U.S. now leaves us with no choice but to proceed with a WTO (World Trade Organization) dispute settlement case and with the imposition of additional duties on a number of imports from the U.S. We will defend the Union’s interests, in full compliance with international trade law.”

The European Union filed a dispute with the WTO Friday.

Canada called the measure “totally unacceptable” and threatened tariffs on up to $16.6 billion of American goods.

“We are imposing dollar-for-dollar tariffs for every dollar levied against Canadians by the United States,” Chrystia Freeland, Canadian Minister of Foreign Affairs, said.

Canadian officials will reportedly publish two lists of goods that will be affected. One list will be taxed 25 percent. The other will have a 10 percent tariff.

Products include flat rolled steel, tubing and pipes.

“The unilateral trade restrictions by the United States are also in violation of NAFTA and WTO trade rules. Canada will therefore launch dispute-settlement proceedings under NAFTA Chapter 20 and WTO Dispute Settlement. Canada will also closely collaborate with like-minded WTO members, including the European Union, to challenge these illegal and counterproductive U.S. measures at the WTO,” Freeland said.

The tariffs will reportedly go into effect July 1.

Mexico also announced plans to counteract the steel and aluminum tariffs.

Mexico’s Minster of the Economy said the country will impose tariffs on U.S. pork legs and shoulders, apples, grapes, cheeses and flat steel.

“Steel and aluminum are inputs that contribute to the competitiveness of several strategic and highly integrated sectors in North America, such as automotive, aerospace, electrical and electronic, among others. Mexico is the main buyer of aluminum and the second of steel in the United States,” the Mexican Ministry of the Economy said. “Mexico reiterates its position against protectionist measures that affect and distort international merchandise trade.”

Officials say the tariffs will remain in force until the U.S. government eliminates its steel and aluminum tariffs.

On Thursday, Ross told reporters the U.S. is still willing and eager to continue talks with trade partners.

Mexico, the EU and Canada say they, too, are open to dialogue.

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