As Liam Fox flies to the US to debate the President's outrageous steel tariffs, it's time for the UK and EU to speak with one voice on the issue.
Nobody should be surprised by President Trump’s decision to impose ‘across the board tariffs’ on imported steel and aluminium: once again he is playing to his ‘America First’ base – with no overall coherent strategy.
Having promised to re-open closed steel mills and mines, US blue-collar workers are wondering if some of his promises would be fulfilled.
But in order to fulfil those pre-election promises, he has threatened to unleash a global trade war – including slapping tariffs on EU-made cars.
Instead of addressing the real issue – the massive over-capacity of steel and aluminium on the global market – he is using his favoured negotiating technique: issue a threat followed by further consequential threats and wait for the reaction. By doing this he is testing the EU in particular.
But he has already given some breathing space to Canada and Mexico, and hinted that Australian steel might be exempt. This is Trump handing out exemptions for which he thinks countries should be grateful.
There is however no reason why UK and EU steel producing countries should face any tariffs – we play the game fairly. Trump used the excuse that it is a question of the national security of the USA. But high-quality, European-made steel and aluminium pose no threat to the USA’s national security.
Under the section of US trade law (Section 232) Trump is using, he had a number of options recommended to him by the US Department of Commerce.
These included:
- Across the board tariffs of up to 24%
- A second option in which tariffs of 53% could be placed on ‘bad actors’ including: Brazil, South Korea, Russia, Turkey, India, Vietnam, China, Thailand, South Africa, Egypt, Malaysia, and Costa Rica – all of whom have been responsible for dumping or subsidising their steel – while limiting imports from all other countries to 100% of their 2017 levels
- A third option was to apply a quota of 63% of 2017 import volumes on all countries and all products
The problem of global overcapacity in the production of steel and aluminium will not be solved by countering tarifs with more tariffs – whether it’s on Harley-Davidsons or Jim Beam bourbon.
Over-capacity is a threat to all countries and to the jobs of all workers – including those UK, EU and USA who are engaged in fair trade. There is no overcapacity in European or US production and workers should not be expected bear the brunt of third countries’ unfair trade practices including overproducing steel and aluminium, driving down prices through non-market conditions and the absence of real employment rights.
There is a need to secure a permanent solution to the problem of global over capacity in the production of steel and aluminium.
This is something Unite and the United Steelworkers (in our global union Workers Uniting) have been calling for – making sure those countries who have been responsible for dumping and subsiding steel (as well as blocking imports) face the consequences of their actions.
The UK and EU steel industries and unions now need to speak with one voice. It is the EU who will need to settle this.
But time is of the essence. A Trump trade war will see even more state-subsidised steel being dumped on the world market – damaging jobs and decent employment.
Tony Burke is Assistant General Secretary of Unite and is a Contributing Editor to Left Foot Forward.
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