US-Europe trade war likely averted, for now

The European Union and the U.S. seem to have averted a trade war for now, after the administration of President Donald Trump said Thursday it was ready to exempt the 28-country bloc from tariffs on steel and aluminum.

EU leaders, who had threatened to retaliate to any new U.S. tariffs with restrictions on American goods, gave a cautious welcome to news of the exemption.

"A trade war would have damaged both sides," Austrian Chancellor Sebastian Kurz tweeted from a summit of leaders in Brussels.

In Washington, U.S. Trade Representative Robert Lighthizer said Thursday that Trump had decided to "pause" the tariffs for countries that are engaged in trade negotiations with the United States. He said the EU would be exempt, along with Canada, Mexico, Australia, Argentina and Brazil.

The EU is the world's biggest trading bloc and it had drawn up a list of dozens of U.S goods — from peanut butter to motorcycles, worth 2.8 billion euros ($3.4 billion) in trade annually — upon which it could impose retaliatory tariffs.

Trump had planned to impose tariffs of 25 percent on imported steel and 10 percent on aluminum. The sanctions are meant to hit China for flooding the world with cheap steel and aluminum but in practice would have hurt many allies, such as the EU.

European Parliament President Antonio Tajani told reporters that "if official confirmation arrives, then that will certainly be a piece of news that goes in the right direction. The U.S. and Europe are two sides of the same coin and I don't think we should get involved in a trade war."

Earlier, Germany's economy minister said he had found officials in Washington "open to our arguments" when he visited to try and avert the tariffs.

Germany's Peter Altmaier and EU trade commissioner Cecilia Malmstrom both visited Washington this week to seek the exemption.

Altmaier told Germany's parliament Thursday "it is a question of fundamental significance: whether we all stand for open and fair world markets in the future."

At the Brussels summit, EU leaders were expected to trumpet their commitment to the world trade order and to press on with free trade deals with the Mercosur countries of South America and Mexico.

Ahead of the summit — in an invitation letter to the leaders — EU Council President Donald Tusk exhorted them to remain an example to the global trading system rather than revert to protectionism.

"As the world's biggest trading power, the EU's response will be responsible and reasonable," he wrote.

The EU rejects Trump's assertion that the tariffs are needed for national security and sees them as protectionist measures. Most EU countries are U.S. allies in the world's biggest security organization, NATO.


Raf Casert in Brussels contributed to this report.