The US announcement took the EU by surprise, as it was believed that exemptions previously agreed with the bloc – and also with Canada and Mexico – would be extended.
China was hit by exactly the same tariffs in March this year, but negotiations between the USA and the EU, Canada and Mexico were widely anticipated to result in the threat against them being dropped.
The Secretary of State for International Trade, Liam Fox, described the US move as “patently absurd” and said that the UK was prepared for a “tit-for-tat” response.
Speaking for the EU, Trade Commissioner Cecilia Malmström said that President Trump’s decision marked a bad day for world trade.
The Commission confirmed that it would open a dispute settlement case at the World Trade Organization (WTO) and would also impose “rebalancing measures” and take any necessary steps to protect the EU market from any trade diversion caused by the US action.
It has also drawn up a target list of 100 US goods worth €2.8 billion, which is reported to include Bourbon whiskey, Levi’s jeans and Harley-Davidson motorbikes.
However, commenting on the news for the CBI, Ben Digby warned that there would be no winners in a trade war, and that the tariffs could lead to a protectionist domino effect, damaging firms, employees and consumers in the USA, UK and many other trading partners.
“Now is not the time for a disproportionate escalation” he said, “and we urge the EU to consider this when initiating its response.”
For the British Chambers of Commerce (BCC), Dr Adam Marshall observed that, as the UK leaves the EU, the US decision to impose punitive tariffs is a helpful reminder that self-interest looms large in trade negotiations.
Ministers, he suggested, should reflect on this carefully before they pursue any future trade deal between the UK and the USA.
