The Kiel Institute for the World Economy (IfW) has warned against hasty countermeasures by the EU in response to the steel and aluminum import tariffs imposed by US President Donald Trump. “The EU should not react impulsively and reflexively with countermeasures” said IfW Vice President Rolf Langhammer to the “Rheinische Post” (Wednesday edition).
“Given the decade-long experiences with US tariffs on steel and aluminum, these are almost always reversed at the request of US companies that process steel and aluminum” the trade expert said. “American steel producers have so far been unable to deliver in terms of quality and quantity, even when US imports become more expensive. This is also expected to be the case this time, as the American economy is likely to continue growing if Trump’s plans to boost the economy with tax cuts come to fruition and domestic demand for processed steel increases” Langhammer said.
The EU Commission should approach Trump to learn about his demands and apply pressure with countermeasures. Additionally, European business associations should convince American investors in Europe that “a trade war would put the profitability of their investments in Europe at risk” Langhammer said. “The more expensive European steel as a result of the tariffs would undermine the competitiveness of US overseas locations worldwide” Langhammer said, citing the example of US automakers Ford and Chrysler.