EU prepares to counter US protectionism

The European Union is preparing for a trade fight with the United States, but sees opportunities for negotiations, Bloomberg reports.

According to the agency, the decision of US President Donald Trump to postpone the introduction of tariffs on imports from Mexico and Canada has strengthened the bloc’s confidence that it will be possible to agree on an acceptable outcome.

According to the source, this step influenced the European Commission’s strategy to prepare a proportional response to Trump’s tariff threats. However, the main obstacle is that the EU has not been able to establish good contacts with the new US administration. In addition, some key trade positions are still pending approval by the US Senate.

The insider also noted that the EU, among other things, will try to defuse a possible dispute with the US over steel and aluminum exports, which could reach a climax in March.

At the end of next month, the suspension of duties on approximately $3 billion worth of American products will expire. The European tariffs on US imports were initially introduced during the first Trump presidency, as a response to US Section 232 duties on steel and aluminum.

The parties agreed to a temporary truce in 2021. The EU extended the suspension of its duties in December 2023. The United States, in turn, extended the suspension of Section 232 tariffs for the bloc (they have been replaced by a system of tariff quotas) until December 31, 2025.

According to an insider, the EU is likely to extend the suspension of its duties after March to avoid the US administration’s complaints and maintain a positive approach.

As previously reported, the EC has prepared a proposal to improve bilateral relations with the United States, which will include increased imports of LNG, fertilizers, and weapons. Other areas of potential cooperation include harmonizing policies toward China in matters of export control, investment verification, and working together to address Chinese overcapacity, especially in the steel industry.

Trump has recently stepped up his tariff rhetoric against the EU, citing a large trade deficit with the bloc. The European Commission has promised a strong response if this step is taken.

As GMK Center reported earlier, US duties on steel and aluminum could affect millions of tons of imports. In 2023, steel consumption in the United States amounted to about 93 million tons, with 13% of this demand coming from abroad. One of the main sources of steel and aluminum imports is the country’s closest trading partners.