EU to impose counter tariffs: How ripple effects of US tariffs shake global markets | DW News

now the US president Donald Trump is shaking up global trade again with his latest tariffs on steel and aluminium coming into effect the 25% tax applies to All Imports of the metals into the US the European union says it is retaliating with tariffs on 26 billion euros worth of us Goods Trump's tariffs are another blow to Europe's already struggling steel industry sparks fly nonstop at this steel production site near Amsterdam but staff here say that business as usual is becoming something of a battle with us tariff policy the latest in a long line of wo

we basically have cost uh related to the uh whole decarbonization uh uh Journey uh and at the same time we Face massive overc capacity across the world and and basically so it's is a sort of a perfect storm this highgrade steel is used for Batteries packaging and car parts it's hard to produce elsewhere meaning some us customers will keep coming but the bigger fear is that more subsidized Asian Metals end up in the European Union as China looks for alternative markets am made flaring tensions with the US that steel will be redirected and with Europe

being one of the only open markets remaining open markets in the world yeah uh Europe peace is like is a likely Target if you have a lack of a Level Playing Field instead of innovation you start cutting cost you start basically uh well to getting to survival mode Energy prices in Europe also run much hotter than elsewhere in this room liquid steel is casted into slabs the slabs come out at about 800° C or, 1500° fah and even from AAR you can really feel the heat on your face here this Dutch plant says it's still

optimistic but in recent years steel factory closures and job Cuts have been announced across the EU we've seen something like 30 million tons lost in terms of steel production um in the the last uh year or so um and when we turn 30 million tons into Steel Workers jobs we're talking about the loss of thousands of jobs across Europe Brussels says it stands ready to back up this strategic sector last month the EU unveiled steps to try and cut energy costs and stimulate demand for cleaner steel with more action planned for late March there is

really a mix uh a mix of measures uh unnecessary making private investment less risky but I think in general making this creating this what we call them lead markets so that uh the the industry actors are really incentivized to invest in the decarbonization so they can kind of reap the green premium though the EU insists this is in line with green promises climate campaigners Fear The Block is backtracking on pledges to make polluters pay industry always says uh we we we're losing jobs because we can't compete with other countries with lower standards and we would

really not be happy with the EU participating in this rate raise to the bottom rhetoric back at the Dutch steel plant efforts to decarbonize are underway but staff here say future proofing an industry facing crisis now is no mean feat I'm going join now by Trin Nan from Hong Kong she's a senior Economist with the Investment Company n Texas welcome to DW um as we just heard in that report European steel producers are worrying now that even more Asian Metals could end up in the European market because of Trump's uh tariffs on steel and aluminum

How likely is this um well very likely um first of all this is um not a new tariff it's just a removal of exemptions right because this is a 25% tariff already in place in 2025 Europe got the exemptions as well as other allies like Japan and South Korea and Australia and Canada and Mexico so by removing this um exemptions it levels the playing field and the playing field is not actually level as the report suggested um input costs are very different in different regions um China obviously produces a much cheaper scale so by raising

tariffs for everyone on steel um it makes um it erodes this this this competitiveness that Canada Mexico EU South Korea and Japan have um and in response to this um the Asians the the South Korean and the Vietnamese have raised duties on Chinese seal because in response to higher barriers to us trade China has exported more to the rest of the world right um to Southeast Asia to North Asia to Europe and elsewhere Latin America um but it's facing that friction within Asia so that means that what will the Europeans do on top of easing

input costs for the Europeans and lowering the regulatory hurdles I think it's very likely they want to they might want to consider what the Koreans and the Vietnamese doing which is putting on anti-dumping duties for Chinese steel um so so it's not just Chinese steel we could potentially see other Asian steals trying to move to Europe as well but I think that is a big concern um and what that means is that there is going to be more tariff barriers globally in respond to this because the US is the biggest importer of um Global goods

and when it has more barriers on the input of it um and everyone else produces more than they consume then we have a problem here um either we reduce capacity or um we have to erect barriers right this obviously is having huge Ripple effects who is going to feel the pain more is it the US economy or is it the rest of the world well for the steel importers um I think first of all um I think for Canada and Mexico it's is relative game right while the sector is not very large there are other

sectors that import steel so so it helps the US Steel makers but there are more um consumer of Steel Goods than the steel makers themselves so I think that you have to think about a short term and longer term so there's a bit of a short-term pain here for American sector is very very sensitive to steal um transportation is one and so on and so forth um um so so as a result um it it has a net effect of negative for the US in the short term in my opinion because when prices rise um

the production is not Rising fast enough and therefore you have a bit of a volume decline right uh um and and and so I think it has a negative impact but for those that depend on this much more proportionally um they will feel the pain uh of course and I think for China steal makers for example they already have excess capacity on Shore um and they're trying to export wherever they can the biggest export markets Vietnam Korea and so on so forth have already increased hurdles and for those sector um they will probably have to

reduce capacity for example okay we've seen stock markets uh seeing steep losses economists a warning of a a potential recession um in the US US what what do you make of President Trump's promise that the American economy will ultimately benefit from all of this I think steel is a good example that right so so far if you look at what president Trump has done it's basically 20% tariffs on China and the removal exemptions of seal now the question the China question is that since we've already already used to this since 2018 20177 we can substitute

some of these products and people have reshuffled their supply chains to the US to sou to Europe to Southeast Asia and so on so if we on the Steel issue is a good example of what is about to come if he imposes tariffs on everyone it supports us steel makers but they're not able to ramp up the capacity so quickly right as the pace in which the president uh imposes tariffs and we just looking at steal now it could be Auto could be chips um if it could be pharmaceutical so over the long run those

sectors will benefit in the US because they benefit from protectionism right by default of higher tariffs relative to abroad but in the short term you have a shock right a shock to the system and this is just steel for now and removal exemptions we have other impending ones and it remains to be seen my thesis is that if the shocks are seen as too abrupt again the US Imports 4.1 trillions of good and that has impact not just direct import but so into other sectors even services and housing right um so when you have that

and of course consumer confidence and investment um so when you have that impacting prices with the volume not Rising enough what happens is that consumption and investment Falls when consumption and investment Falls we have a fall of GDP in the short term right um over the longer Horizon production will rise but in the short term there is a big shock now the shock can be mitigated if the target tariffs are targeted right and and when their tariffs are targeted and consistent then producers and exporters and importers know exactly what to come and they act accordingly

and moreover there is uh a way to substitute from that in the short term all right Economist Trin Nan in Hong Kong thank you so much for your analysis but