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Europe seeks a deal on Trump tariffs &mdash; and prepares for a fight

030918 europe steel tariffs pic
A robotic arm removes sheets for steel from a furnace at the ArcelorMittal research center in France. The European Union plans to seek an exemption from President Trump's tariffs on steel and aluminum imports. (Marlene Awaad/Bloomberg)

The European Union will ask the Trump administration for an exemption from stiff U.S. tariffs on aluminum and steel but if that doesn’t work, its leaders said Friday, the trading bloc is prepared to fight.

“We will continue the preparatory work for potential rebalancing measures, hoping we are not forced to use them,” said Jyrki Katainen, vice president of the European Commission, which functions as the alliance’s executive arm. Such retaliatory moves might include duties on U.S. exports from blue jeans to bourbon, officials have said.

“If the worst-case scenario happens, we are ready to take the U.S. to the World Trade Organization court and are discussing with other allies, other partners, doing it together,” he said.

Europe’s response reinforces the concerns of economists and corporate executives that President Trump’s duties of 25 percent on steel imports and 10 percent on aluminum imports may ignite a trade war that damages the global economy.

The tariffs don’t take effect until 15 days after the March 8 announcement, and Trump hinted that he would make exceptions for European allies who agreed to pay more for their defense through the North Atlantic Treaty Organization.

In Europe’s view, those are separate issues. NATO funding decisions are made by member countries while trade talks are handled at the EU level, Katainen said Friday.

“The EU does not have a role in NATO,” he said. “We have to solve one problem first, and if there are issues regarding NATO, it’s another thing.”

The bloc will seek further clarity on the U.S. policy when trade chief Cecilia Malmstrom meets this weekend with her Japanese counterpart and U.S. Trade Representative Robert Lighthizer, he added.

“It should be clear to everybody that Europe is the most natural security ally to the U.S. and vice versa,” Katainen said. “Our companies have not dumped steel or aluminum in the U.S. market, so this cannot be used as an excuse to set up high tariffs.”

Trump has, for the most part, shrugged off such opposition to the tariffs, though he conceded Thursday that flexibility for U.S. allies was vital. Congressional Republicans and corporate lobbyists have warned the president that such measures also risk undercutting the benefits of signature corporate tax cuts in late 2017.

Proclamation: https://t.co/aCaMtOUAl0Remarks: https://t.co/nypErcqFSU pic.twitter.com/rcrkpvChkz&mdash; Donald J. Trump (@realDonaldTrump) March 8, 2018

“Tariffs are taxes that make U.S. businesses less competitive and U.S. consumers poorer,” House Ways and Means Committee Chairman Kevin Brady, a Texas Republican, said in a letter to the president signed by more than 100 of his colleagues.

While Trump heeded the letter’s suggestion to establish a “robust exclusion process,” the metals tariffs are just the latest of his protectionist actions.

He earlier imposed duties on solar panels and washing machines, and Lighthizer’s office is working on a review of trade issues with China that might result in duties against the world’s second-largest economy.

“Trade is the central policy fault line of this administration,” said Chris Krueger, an analyst with Cowen Washington Research Group, which has tracked government policy for 40 years. “Trade deals require Congress, but tariffs, quotas, countervailing duties are solely Trump’s decision. To build Humpty Dumpty, you need Congress. Trump can break Humpty Dumpty all by himself.”