EU starts study into possible steel import limits

BRUSSELS (Reuters) - The European Union began a study on Monday on whether the import tariffs imposed by U.S. President Donald Trump warranted action to prevent predominantly Asian producers flooding Europe with steel.

Steel rolls are seen at the Volkswagen plant in Emden, Germany March 9, 2018. REUTERS/Fabian Bimmer

Trump’s tariffs, of 25 percent on steel and 10 percent on aluminum, came into force last Friday, although the European Union and six other countries secured temporary exemptions.

The EU is concerned about whether steel manufacturers subject to the U.S. tariffs will divert their product to Europe, leading to a surge of imports.

Its study, which may last up to nine months, could lead the EU to impose its own quotas or tariffs on steel, including stainless steel and pipes, to prevent harm to its own industry.

The tariffs or quotas would have to apply to all countries, meaning leading exporters China, India, Russia, South Korea and Turkey would be hit. U.S. steel makes up less than 1 percent of EU steel imports.

“The information currently available to the European Commission... has revealed that imports of certain steel products have recently increased sharply showing that there is sufficient evidence that these trends in imports appear to call for safeguards measures,” the European Commission said in a document published in the EU official journal on Monday.

China’s commerce ministry said it was willing to strengthen coordination with the European Union to cope with chaos caused by the U.S metals tariffs, adding that protective measures would only make the situation worse.

The Commission said total imports of steel had increased to 29.3 million tonnes in 2017 from 17.8 million tonnes in 2013, largely due to global overcapacity and measures taken by third countries to limit dumping.

For some products, it said, the industry was in a fragile condition and vulnerable to further increases in imports, which was likely due to trade defense measures, including the recent imposition of tariffs by the United States.

“The investigation will examine the situation of the products concerned, including the situation of each of the product categories individually, also based on the most recent developments, such as any trade diversion resulting from the US measures,” the Commission said.

It has given interested parties 21 days to complete questionnaires or submit information to aid its inquiry.

The European Union itself has until May 1 to secure a permanent exemption from U.S. metals tariffs.

Europe says it wants to avert a trade war but the Commission has proposed a series of measures if the White House hits EU producers, including a challenge at the World Trade Organization and import duties on U.S. products such as orange juice, bourbon and Harley-Davidson Inc HOG.N motor-bikes.

Reporting by Philip Blenkinsop; Editing by Hugh Lawson