Merkel: Europe will push back if hit with trade tariffs

As steel tariffs squeeze U.S. businesses uncertainty threatens economic growth

The confrontation stems from the president's decision in March to slap tariffs of 25 per cent on imported steel and 10 per cent on imported aluminium.

Two people familiar with the process said the Trump administration has been considering whether to provide a short-term extension of the exemptions to allow for more time to review the countries' efforts to secure permanent exemptions.

On Monday European Commission spokesperson Margaritis Schinas said talks were underway with the USA government "at all levels".

The EU on April 16 submitted a request to the World Trade Organization for consultations with Washington to determine whether and how the US can compensate the bloc if trade flows into the EU are affected by the new tariffs. The country also agreed to double to 50,000 the number of USA cars that could be imported without meeting local safety standards.

The White House, which instituted the metals levies on national-security grounds, has argued that the WTO has no authority to adjudicate such matters because WTO rules permit countries to take "any action" to protect their "essential security interests". Brussels has already threatened to hit back with tariffs on American imports such as motorcycles, jeans, orange juice, bourbon, and peanut butter-after Canada, the European Union is the biggest importer (chart in German) by volume of that quintessentially American product.

If tariffs do go into effect, it could paralyse activity between the United States and European Union economies, which accounts for one third of global trade flows and half the world's GDP, according to the EU. More than half of the imports to the US are manufacturing components or raw materials, used by USA companies to make other products. The EU has threatened to retaliate with duties on iconic American goods such as Harley-Davidson motorcycles and Kentucky bourbon.

The cut ends of steel rebars.

The EU's temporary exemption from the tariffs expires Tuesday.

Mnuchin's comments conflicted somewhat with comments by U.S. Commerce Secretary Wilbur Ross, who told Bloomberg News in an interview published on Sunday that the White House will continue to grant some countries relief from the metals tariffs. Before the tariffs were introduced, French President Emmanuel Macron said that the bloc "won't talk about anything while there's a gun pointed at our head".

The EU says that it will only discuss terms of trade with the United States once it has received a permanent exemption to the steel and aluminium tariffs. The U.S. imposed the tariffs after concluding foreign shipments imperil its security.

However Donald Trump has been scathing about the current terms of trade with Europe.

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