Trade tariffs: Deadline looms on US exemption for EU

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image captionThe EU had a temporary exemption to steel and aluminium tariffs but that runs out on 1 May

EU Trade Commissioner Cecilia Malmstrom is to hold last-ditch talks with her US counterpart aimed at exempting the 28-nation bloc from President Donald Trump's steel and aluminium tariffs.

The EU says it expects a "permanent and unconditional" exemption to replace the temporary measure running out on 1 May.

If that fails, it will launch a series of countermeasures.

Canada, the biggest exporter of steel to the US, also faces tariffs but talks have been postponed for a week.

Canadian Prime Minister Justin Trudeau said on Monday his government has been in regular contact with the White House on Canada's temporary exemption to metals tariffs.

"We are optimistic they understand this would be a bad idea for both our economies," Mr Trudeau said.

Meanwhile the UK's International Trade Secretary, Liam Fox, said placing tariffs on UK exports would be "illogical" because some products sold to the US were destined for the American military.

Mr Trump imposed tariffs of 25% on steel and 10% on aluminium in March.

When China was hit, it retaliated with its own duties on US imports such as pork, fruit and wine. Mr Trump responded by calling for further US tariffs.

How much hinges on these talks?

An estimated 320,000 workers across the EU are employed in the steel industry and the steel association Eurofer says President Trump's threat of trade tariffs has already led to a steep surge in steel imports into the EU.

Germany's Chancellor Angela Merkel met Mr Trump on Friday but no breakthrough was reached.

"For the time being our priority is the ongoing high-level dialogue to secure a permanent exemption," Ms Malmstrom said, appealing for the EU and US to work together.

A European Commission spokesman said the EU was "patient but also prepared".

US Commerce Secretary Wilbur Ross, who will discuss the tariffs with Ms Malmstrom by telephone before the midnight (04:00 GMT) deadline, has indicated some US allies will be given last-minute exemptions if they accept a quota of US imports, but not all.

Who else is hit by the tariffs?

South Korea was given an indefinite exemption in return for a 30% cut in its steel exports to the US but other countries also face a Tuesday deadline.

Canada and Mexico were given exemptions while talks took place over Nafta (the North America Free Trade Agreement), along with Argentina, Australia, Brazil and the EU. Those talks are due to resume next Monday.

It appears that President Trump has set his sights on EU exports, and German carmakers in particular.

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What happens without a deal?

At talks with Mrs Merkel and President Emmanuel Macron of France last week, Mr Trump gave no indication of what would happen. In Mrs Merkel's words, "The president will decide; that is very clear."

On Sunday, the two leaders discussed the 1 May deadline with UK Prime Minister Theresa May and issued a statement making clear that "the EU must be ready to react, if necessary, with efficiency and speed".

The EU refused to discuss on Monday how quickly it would respond if the US refused to exempt the bloc from the trade tariffs.

But Ms Malmstrom has already outlined a draft list of US products that could be hit, including Levi jeans, peanut butter, cranberries, orange juice and bourbon. That list amounts to some €2.8bn (£2.5bn; $3.4bn) of imported goods, while the EU exports some €6.4bn worth of steel and aluminium to the US.

Is there a solution?

image copyrightEPA
image captionPresident Trump met Angela Merkel on Friday but there was no sign of a breakthrough on trade tariffs

The European Commission has said only that it is prepared for a busy 1 May, whatever happens.

An unconfirmed report in German media said the US commerce secretary was looking for a real-terms cut in EU steel and aluminium exports to the US, which would amount to 90% of the level in 2016/17. That was turned down by the Commission as unacceptable, according to Frankfurter Allgemeine Zeitung.

German Economy Minister Peter Altmaier called for a concrete offer to the US while German transatlantic co-ordinator Peter Beyer was downbeat about a potential exemption, saying "we should not put too much hope in that".

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