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Economists and politicians are reacting to the imposition by the USA of tariffs on steel and aluminuim imports from Canada, Mexico and the European Union.
Commerce Secretary Wilbur Ross said starting Friday, steel and aluminuim products from will be subject to the same tariffs as most other nations when imported into the USA. Steel will be subject to a 25% duty while aluminium will be subject to a 10% duty.
The Commerce department has been in talks with the European Union - which has enjoyed a temporary waiver to the tariffs - on a trade arrangement to allow for a permanent exemption from the tariffs.
However, no accord appears to be forthcoming.
“The President’s measures are deeply concerning for firms in the UK, for close trading partners and across supply chains," says Ben Digby, CBI International Director. “Overproduction can distort the global market and erode the level playing field that business depends on to stay competitive. But this is a shared challenge whose root causes should be tackled jointly by the EU and the USA."
The CBI stress there are no winners in a trade war, which will damage prosperity on both sides of the Atlantic.
"These tariffs could lead to a protectionist domino effect, damaging firms, employees and consumers in the USA, UK and many other trading partners," says Digby.
"I am concerned by this decision. The EU believes these unilateral US tariffs are unjustified and at odds with World Trade Organisation rules. This is protectionism, pure and simple. Over the past months we have continuously engaged with the US at all possible levels to jointly address the problem of overcapacity in the steel sector," says European Commission President Jean-Claude Juncker.
An official statement from the European Commission says it is determined to shield the EU steel and aluminium markets from damage caused by additional imports that might be coming into the EU as a result of the closure of the US market.
Other key European politicians are already threatening to retaliate in what could be an early salvo in a nascent trade war.
"Europe does not want a trade conflict. But if realDonaldTrump decides to treat Europe as an enemy, we will have no choice but to defend European industry, jobs & interests. We will not accept this highly regrettable decision without reacting," says Manfred Weber, Chair of the EPPGroup in the European Parliament and a close ally of German Chancellor Angela Merkel.
Weber adds that Trump's decision has to be a wake-up call for us Europeans: "with the US closing in on itself, we should be bridge-builders & reliable partners for the rest of the world. Europe now has to act with a clear message and remain united, calm & proportionate."
However, the CBI believe any escalation is not the answer.
"We urge the EU to consider this when initiating its response. The UK is the largest foreign investor in America, and British companies support over 1 million jobs in the States, stretching from Alaska to New York. We must work with the USA to find a way out of this current scenario that preserves our economic links, and we will continue working urgently with the U.S. Administration to protect British trade, jobs and growth," says Digby.
The CBI hope that "the USA will swiftly reconsider its decision" and the business body which represents over 190 000 UK businesses will be pressing home the importance of our transatlantic relationship with counterparts and government figures in Washington, London and Brussels "in order to protect the free and fair trade that is the key to our economic future."
News reports suggest that Mexico has already retaliated and will impose equivalent measures on a diverse product list, including flat steel and some pork products.