EU may target $3.5 billion of US imports for trade retaliation

The European Union is considering applying 25 percent tariffs on around $3.5 billion of imports from the United States if President Donald Trump carries out his plan to apply global duties to steel and aluminium, EU sources say.

President Donald Trump ordered combative action on foreign trade on Thursday stating that the US would impose steep tariffs on steel and aluminium imports, escalating tensions with China and other trading partners and raising the prospect of higher prices for American consumers and companies.

Trump said the duties of 25 percent on steel and 10 percent on aluminium would be formally announced next week although White House officials later said some details still needed to be ironed out.

The tariffs, he said, would remain for "a long period of time," but it was not immediately clear if certain trading partners would be exempt.

The Dow industrials also fell more than 1 percent for a fourth straight day on Friday on mounting fears of a global trade war following President Donald Trump's comments.

Respond firmly

The European Commission in return has said it would respond "firmly" to proposed US import duties of 25 percent on steel and 10 percent on aluminium.

It has spelt out it would join others in a challenge at the World Trade Organization (WTO) and consider safeguard measures, last deployed in 2002, to guard against steel and aluminium being diverted to Europe from elsewhere if US tariffs come in.

A further counter-measure under consideration would specifically target the US to "rebalance" trade between the two, EU sources say.

The US tariffs would be officially brought in on grounds of national security, but the European Union says US military requirements represent no more than 3 percent of US production and that the measures are really a form of protectionism for US manufacturers.

EU exports of steel to the United States in 2017 were worth 5.3 billion euros ($6.53 billion) and of aluminium 1.1 billion euros.

For certain grades of steel, the United States cannot show there was any increase of imports last year, the EU sources say, meaning it would not be allowed to apply safeguard measures to them. For the EU, exports of those grades amounted to 2.8 billion euros ($3.5 billion).

Assuming US tariffs fully covered EU steel, the European Union would put forward 25 percent tariffs on 2.8 billion euros worth of goods from the United States.

About a third would be steel grades, another third other industrial products and final third agricultural products.

The list of products is set to be presented next week to EU countries, whose approval would be needed.

The "rebalancing" would have to take place within three months.