EU ready with ‘nuclear option’ tough tariffs if US sparks trade war over steel. A “nuclear option” of trade defences to hold a back of flood of steel imports being dumped in Britain and the EU could be employed if the US shuts its markets.
It is thought the European Commission is looking at measures not used for 14 years if President Trump’s investigation finds that imports of steel are endangering America’s national security by harming domestic producers.
A report is due any day on the “Section 232” probe which could allow the US to block steel from foreign producers – mainly targeting Chinese steel mills subsidised by the Beijing government – from coming into the US by imposing huge trade tariffs on it.
President Trump fears that US steel companies could close as they would not be able to compete, harming America’s industrial base.
However, Section 232 tariffs would likely shut out all imports, heaping pressure on Britain’s steel industry, with exports to the US accounting for 9pc of all British steelproduction, worth about £350m a year.
With the US market closed, production from China would likely be diverted to the UK and Europe, putting extra strain on already hard pressed businesses still recovering from the steel crisis which cost thousands of jobs two years ago.
The trade defences thought to be under consideration by the EC are known as “safeguarding measures”. They could be quickly introduced, imposing large tariffs on imports in weeks, rather than the months normally taken and not requiring lengthy EC investigations and proof of damages which may come to late to save businesses from collapse.
EU Trade Commissioner Cecilia Malmstroem said the bloc was “making preparations” to retaliate in the event the US. introduces new tariffs, adding that indications are that such measures would mean the EU “would be unjustifiably hit.”
Ian Rodgers, a former UK Steel industry executive, said safeguarding measures were last used in 2003.
“George W Bush imposed tariffs pretty much across the board of 30pc for political reasons. The EU response was pretty robust with safeguarding measures which meant there was no surge of redirected steel,” he said.
The speed of the action shielded EU steel makers, Mr Rodgers said, adding “safeguarding is pretty much the strongest action they could have taken in terms of it being pretty unassailable”.
A spokesman for the EC refused to be drawn on what measures are being drawn up to defend the European industry, saying it was “too early to be talking about a specific response” as the US has yet to take action.
However, he added that the Commission “does not see evidence that imports, and certainly not those from the EU, impair or threaten to impair US national security and hope that security exceptions are not misused”.
“We stand firmly for trade that is both open and fair,” the spokesman added. “Ensuring fair conditions for our steel producers is of key importance.”