ECONOMY

Turkey, EU agree on cooperation to counter increased US tariffs on steel, aluminum imports

TURKEY, EU AGREE ON COOPERATION TO COUNTER INCREASED US TARIFFS ON STEEL, ALUMINUM IMPORTS

Following U.S. President Trump's decision to increase import tariffs on steel and aluminum, which has been widely criticized around the world, Turkey and EU authorities negotiated and agreed to act together to discuss the issue at the WTO

Economy Minister Nihat Zeybekci spoke with EU Trade Commissioner Cecilia Malmström on U.S. President Donald Trump's decision to implement additional customs duties on imports of steel and aluminum, and the two reached a consensus that they should act together at the World Trade Organization (WTO). An Economy Ministry statement said the U.S. launched an ex-officio investigation under Section 232 of the Trade Expansion Act of 1962 with an executive order issued on April 20, 2017. The investigation aimed to determine whether steel imports posed a threat to national security.

The non-confidential version of the report submitted to the U.S. president was shared with the public on Feb. 16 by the U.S. Trade Secretary Wilbur Ross and Trump announced the additional by 25 percent tariffs on steel and 10 percent on aluminum on March 1.

"As of 2017, our exports to the U.S. reached $1.2 billion in steel and $78.5 million in aluminum. In this context, the ministry closely follows the developments and necessary initiatives are taken in terms of the U.S. and other exporting countries and country groups," the ministry's statement said. "In this regard, Economy Minister Nihat Zeybekci held a phone call with EU Trade Commissioner Cecilia Malmström on March 5. The two sides reached a consensus that they should act together at the World Trade Organization in the future."

The new planned customs duties Trump announced despite warnings from advisers will reportedly be shouldered by American producers and consumers to a great extent.European Commission President Jean-Claude Juncker said there would be retaliation in a few days to balance trade relations between the EU and the U.S. "We will not stand idle against these unfair measures that threaten the industrial sector, which employs thousands of people in Europe," Juncker said, adding that the European Commission will take countermeasures in line with WTO rules.Canadian Prime Minister Justin Trudeau called the tariff decision "unacceptable." The United States imports the highest amount of steel and aluminum from Canada. Canadian Foreign Minister Chrystia Freeland also said Canada will take countermeasures to protect its commercial interests and workers.

The Mexican government also announced that if the country is not exempted from the tariffs, there will be no option but retaliation. Countries such as Japan, Australia, Brazil and China, which are often targeted by Trump's administration, have shown their discomfort regarding the decision.

Many organizations ranging from the WTO to the International Monetary Fund (IMF) have also warned the Trump administration of the risks of implementing such tariffs.

WTO Director Roberto Azevedo said yesterday that Trump's additional customs duties on steel and aluminum could trigger an increase in trade barriers worldwide.

Azevedo said a trade war would not be in anybody's interest. In his call to avoid retaliation, he said: "When we enter this road it will be very difficult to turn away. The concept of an eye for an eye can blinds us and drags the world into a deep recession."

IMF spokesman Gerry Rice said, "We are concerned that the measures proposed by the U.S. will actually increase the use of national security justification to legitimize countries' import restrictions."

Tariff decision would hurt U.S.

Barry Bosworth, a senior specialist at the Brookings Institution, said Trump's voter base plays a crucial role in his adoption of conservative trade policies.

He recalled that Trump carried states where many companies have gone out of business, including Ohio, Michigan, Wisconsin and Iowa. "Conservationism is a popular position among American workers and companies who have unfortunately suffered losses due to imports," Bosworth said. "They think that everyone who sells products in their own price range is deceitful and sells at a price below cost, even though they are on the losing side because they are not competitive in world markets."

Noting that the Trump administration cited "national security" instead of "dumping" since they know the truth was different, Bosworth said the burden of additional customs duties will largely be shouldered by American producers and consumers.

As well as many American business associations, prominent Republicans such as Representative Paul Ryan opposed Trump's additional customs duties on the grounds that they would harm American companies and consumers.

The announced tariffs on steel and aluminum are not expected to cause significant damage to China, which the U.S. has previously accused of over-producing steel and lowering prices.

International credit rating agency Fitch Ratings said in a statement published several days ago that the effect of such tariffs on Chinese metal producers would be limited.

The reason why China, the world's largest steel producer, would not be affected much by the regulation is that the U.S. imports a significant portion of its steel and aluminum from other countries.

Turkey is the eighth-largest steel producer in the world. The country's exports to the U.S. stood at around $1.2 billion in 2017, according to data from the U.S. Census Bureau. Exports to the U.S. account for 10 percent of Turkey's total steel exports. Turkey's total iron and steel exports were around $8.25 billion in 2017, according to Customs Ministry data.

Trump's decision to introduce a new 25 percent tariff on imported steel and 10 percent on aluminum will of course impact Turkey, but it will be relatively limited, according to Turkish Steel Exporters' Association (ÇİB) Chairman Namık Ekinci, who also said that the U.S. will be the most affected by this turmoil.

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