US tariffs on aluminum and steel

We regret the exception given to the EU till the end of May had not been turned in to an indefinite one. The negotiation between the EU leaders and US administration failed and the steel and aluminum is subject of 25%, respectively 10% tariffs.

“We see this unilateral step of President Donald Trump as an anti-systemic measure and the argumentation based on the Cold war legislation from the sixties built on the “national security” issue as ridiculous. Even more absurd is the US investigation based on the same legal procedure and aiming on imported cars. It is a slap in the face of the world trade liberalization effort that has unfortunately potential to escalate in a trade war,” said Jaroslav Hanak president of Confederation of Industry of The Czech Republic.

It is endangering the important US – EU alliance and the multilateral trading system which has been created and supported mainly by those entities. We do fully support the position of the EU based on keeping the WTO rules and respect to the rule based multilateral system in general.

We see the EU countermeasures are sensitively designed with respect to the supply chains of the European industries. Its application is justifiable even if partly symbolic. Doing nothing would have been a wrong attitude showing the EU unity and sending the US a signal that it is not possible to act from a position of force with no consequences. However EU is not sending a message provoking the escalation.

The impact on Czech firms has two levels. Firstly there is a direct export of steel (and limited export of aluminum) products to the USA. This contains significant volume of high value added components, like seamless stainless tubes or rails. Some of those exported items are not even being produced in the US. The companies will be damaged but thanks to diversification their existence is not endangered. The second impact level is indirect based on higher competition and pressure on the market. We are afraid of increased imports and dumping attempts from third countries.

We urge the EU to use its modernized trade defense instruments and antidumping legislation where it is justified.

There is a running investigation on the possible use of safeguard measures that could, in justifiable cases, limit imports of all aluminum and steel into the EU by tariff, tariff quota or the imposition of a fixed quota. With these measures however the EU must handle very sensitively so as not to damage trade with partners who are in the same situation and have their investments in the EU.

We firmly believe this is not a permanent state and in the foreseeable future we will be able to return to negotiations. Above all, we have to prevent the escalation of this business dispute.