An employee works in front of the blast furnace past rolls of sheet steel at a mill of German steel producer Salzgitter AG Alexander Koerner/Getty Images

How Europe Should Respond to Trump’s Steel Tariffs

Whereas the US has apparently abandoned economic logic in its search for quick “wins" on trade, the EU continues to prioritize economic logic above geopolitical considerations. Fortunately, when it comes to steel, there is a way to give Trump his victory that aligns with the EU's economic interests.

BRUSSELS – The last-minute decision by US President Donald Trump’s administration to delay imposing steel (and aluminum) tariffs on Canada, the European Union, and Mexico for 30 more days will ostensibly give the US a chance to negotiate a longer-term arrangement with its trading partners. What should such an arrangement look like?

Trump is not the first US president to introduce protectionist measures on behalf of America’s steel industry. In 2002, President George W. Bush imposed a number of import restrictions, including headline tariffs of 30% on some steel products. But, even then, more than 70% of steel imports were exempt from any protectionist measures. Trump, by contrast, proposes measures that will affect the entire steel sector.

This difference reflects a more fundamental shift in the US approach to trade. The Bush administration generally favored open trade; its hand was forced by the domestic steel lobby, at a time when the industry was generating large losses. Still, there was an implicit understanding that everybody would abide by the rules of the game – specifically, the rules of the World Trade Organization – and the US ultimately did.