US steel tariffs: No one wins a ‘race to the bottom’ – Merkel

US President Donald Trump, left, and German Chancellor Angela Merkel at a panel discussion at the G20 summit in Hamburg, Germany. Photo: AFP

German Chancellor Angela Merkel has called for the European Union to be exempted from new US tariffs on steel and aluminium imports.

“The best option would be [for the EU] to be excluded,” she told business leaders gathered in Munich.

Ms Merkel warned that no one could win a “race to the bottom” and said the tariffs risked “hurting everyone”.

President Donald Trump says the US has suffered from “unfair trade” and that the tariffs will boost industry.

The import duties – 25% on steel and 10% on aluminium – will go into effect in 15 days, although Canada and Mexico will be exempt while negotiations continue over the North America Free Trade Agreement (Nafta).

Mr Trump signed the declaration in a White House ceremony attended by American workers from both industries.

International reaction

  • New Zealand finance minister Grant Robertson said he did not support the tariff and did not want a trade war. He said officials would look into the extent of the tariffs and how New Zealand might secure an exemption
  • China’s steel and metals associations demanded retaliation, urging the government to target US imports including coal, agricultural products and electronics.
  • Japan said the import duties would have a “big impact” on bilateral ties, while South Korea threatened to take the issue to the World Trade Organization.
  • Canada, the largest supplier of steel and aluminium to the US, welcomed its exemption but said it would continue to press Washington to drop the tariffs.
  • Mexico’s Economy Minister, Ildefonso Guajardo, insisted the tariffs could not be linked to talks on Nafta.
  • The EU is seeking talks on the issue and has denounced the tariffs. European Commissioner Jyrki Katainen called for an exemption, and insisted that EU companies were “not a source of unfair trade”.
  • The UK government said it would work with EU partners to consider “the scope for exemptions” while “robustly” supporting UK industries.
  • Dutch Prime Minister Mark Rutte said Mr Trump’s tariff decision was “very disappointing”. He warned that the Netherlands was prepared to take “counter-measures”.
  • Australian Prime Minister Malcolm Turnbull said the US could have “no complaints” about their bilateral trading relationship and his government would be “relentless” in pursuing an exemption from the tariffs.
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There was strong opposition from within Mr Trump’s own Republican Party, which is traditionally in favour of free trade.

US House Speaker Paul Ryan denounced the new measures and said he feared “unintended consequences”.

Republican Senator Orrin Hatch, who chairs the Senate Finance Committee, said he believed the president had been “misled” by those advising him at the White House.

Another Republican Senator, Jeff Flake, said he would draft and introduce a bill to nullify the tariffs, adding: “I urge my colleagues to pass it before this exercise in protectionism inflicts any more damage on the economy.”

However, those who backed Mr Trump’s move included Democratic Senator Joe Manchin who said it was “past time to defend our interests, our security and our workers in the global economy”.

Trump’s pledge

In his election campaign, Mr Trump pledged to protect American workers and to rebuild the steel and aluminium industries.

The two metals are “the backbone of our nation… the bedrock of our defence-industrial base”, the president said at Thursday’s signing ceremony.

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“Our greatest presidents from [George] Washington, to [Andrew] Jackson, to [Abraham] Lincoln, to [William] McKinley and others – they protected our country from outside influence, from other countries coming in and stealing our wealth and stealing our jobs and stealing our companies,” he said.

“And we’re going to be very fair, we’re going to be very flexible, but we’re going to protect the American worker, as I said I would do in my campaign.”

Correspondents say Mr Trump is aiming to appeal to blue-collar voters in states such as Pennsylvania who turned away from the Democrats to support him in 2016.

Mr Trump has said that the US would “win big” in any trade war.

Some countries are likely to take the US to court, arguing that the decision violates World Trade Organization rules.

The White House, however, says that the national security rationale for the move is “unassailable” and national security considerations are allowed under WTO rules.

The director of UK Steel said the tariffs would have a profound and detrimental impact on the UK steel sector.

“Imposing such measures on US allies in the name of national security is difficult to comprehend,” Gareth Stace added.