Washington issues a 'pause' on steel and aluminum tariffs for EU, says US official

22.03.2018

Hours before the tariffs were to go into effect, the US president has exempted the EU and other countries. But China is expected to take the full brunt of the tariffs in what observers believe could trigger a trade war.

US Trade Representative Robert Lighthizer told the Senate Finance Committee that US President Donald Trump has authorized a "pause" in steel and aluminum tariffs set to go into effect at midnight on Thursday.

Lighthizer said the "pause" will also extend to other countries, including Australia, Brazil, Canada, Mexico and South Korea.

Read more: Germany, the US and non-free trade

"We have Europe, we have Australia, we have Argentina, we have Brazil, who am I forgetting? And obviously Korea, where we're negotiating, of course," said Lighthizer. "The idea that the president has is that, based on a certain set of criteria, some countries should get out."

The temporary exemption is aimed at finding a more permanent solution to Washington's concerns of steel and aluminum dumping. Under the measures, the US will impose penalties of 25 percent on steel imports and 10 percent on aluminum imports.

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Germany, Europe signal positive step

Germany's BGA trade association chief said Washington's decision to exempt the EU has eased the pressure on the country's steel industry.

Earlier Thursday, German Economy Minister Peter Altmaier told the Bundestag that he had received positive signals from US officials during a visit this week.

Altmaier said he found officials with "open ears," noting they were receptive to German and European arguments. After Trump announced his decision to impose tariffs on steel and aluminum imports to the US, European officials threatened retaliatory measures, including tariffs on Harley Davidsons, jeans and bourbon whiskey.

One senior EU official described the announcement as "welcome, in line with our expectations," yet remained wary: "But we'll see whether this is officially confirmed."

EU officials have reason to be wary, since the announcement is just a stopgap measure. EU Trade Commissioner Cecilia Malmstrom said that the economic bloc — which is the largest trading partner of the US — is "always willing to engage with our American partners, but we do not negotiate anything under pressure or threat."

China threatens retaliation

While several US allies received exemptions, China is expected to take the full brunt of the tariffs, alongside other Washington-imposed penalties.

Read more: As China takes 'center stage,' Europe stands at a crossroads

The Trump administration is expected to further extend trade restrictions with China, including restrictions on Chinese investments.

But China has hit back, with its Commerce Ministry saying: "China will not sit idly to see its legitimate rights damaged and must take all necessary measures to resolutely defend its legitimate rights."

'Negative consequences for US economy'

US companies and businesses have warned the Trump administration of targeting China with trade restrictions, saying Beijing's response could undermine US economic interests and effectively trigger a trade war.

Read more: Does Donald Trump eye a weak dollar?

"The imposition of sweeping tariffs would trigger a chain reaction of negative consequences for the US economy, provoking retaliations; stifling US agriculture, goods and services exports; and raising costs for businesses and consumers," US business groups said in a letter to Trump.

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ls/kl (Reuters, AFP, AP, dpa)