The EU's trading resistance with the US runs the risk of unraveling

Copyright © HT Digital Streams Limit all rights reserved. A steel plant in brake, in West Germany. Photo: Thilo Schmuelgen/Reuters Summary European equipment manufacturers want changes to the July trade agreement after being hit by the expanding steel tariffs of the White House. When President Trump unveiled his trade agreement with the European Union in July, businesses across the block thought it would end months of uncertainty for one of the world’s most profitable trading relations. Less than two months later, frustration is growing with the agreement in Europe. Businesses stop exports to the US and complain about new bureaucratic obstacles and warning about a new era of unpredictability. The reason: The Trump administration’s decision to expand its 50% metal tariffs to cover hundreds of additional steel and aluminum products, and a large number of European manufacturers with rates higher than the 15% Trump and the EU who agreed for most products. While the US steel and aluminum rates initially only targeted the metals themselves and mostly metal parts, such as screws, it now applies to objects such as cars, pumps, machine tools and construction equipment. “About 30% of EU US machinery imports are now subject to 50% tariffs on the metal content of the product,” Bertram Kawlath, president of the German Mechanical Engineering Industry, or VDMA, wrote in a letter to the European Commission -President Ursula von der Leyen at the end of August. The sector, he added, faces an ‘existential crisis’. The White House and the Department of Trade did not immediately respond to requests for comment. The resentment acceptance that greets the July agreement is now threatening to unravel. Dissatisfaction spread not only to politicians within the EU member states, but also to the European Parliament, whose approval is needed for key parts of the agreement. Bernd Lange, a German politician leading the parliament’s trade committee, said: ‘There is no safety and predictability’ in the US EU agreement. Lange said he now expects lawmakers to claim changes to the draft legislation that will eliminate or reduce the rates for a series of US imports under the July agreement. Why should the EU give “zero rates for US motorcycles, knowing that European producers now have to pay not only 15%, but also the steel and aluminum tariffs?” Lange said. After the Department of Trade expanded the metal tariffs to hundreds of derivative products that started last month, the company stopped exports to the US, stopped the production destined for the market and sent 100 workers home. Krone looks at the distraction of consignments that are already going on to Mexico and Canada. “We don’t know if our customers are ready to pay 15% or 50% more for a machine or the parts thereof,” Krone said, adding that the disruption of the US sales will affect the company for a long time. Bernd Lange, a German politician, says there is “no security and predictability” in the US EU agreement. US companies are also affected. John Deere, one of Krone’s biggest competitors, has plants in Mannheim and Zweibrücken in Germany. According to a spokesman for the company, about 20% of its German production is exported to the US. “We rely on structural cost discipline and close collaboration with our distribution partners to dampen the impact of the steel rates, the spokesman said.” We are not going to relocate our production from Germany to the US. For a machine worth $ 1 million with a steel content of 20%, the rate would be 50% of $ 200,000 and 15% of the rest. 220,000 per machine -or a 22% tariff. The EU does not pose a threat to US steel producers, and that both economies have to do with cheap imports from other countries. amount of EU steel and aluminum at a lower rate can make it possible. Aluminum content of the 15,000 parts that make up the large X feed -harvest, for example, document. Steel tariff list, but is used in spraying machines. Olive Branch, Ms. In March, a speech held in a plastic factory in Michigan and said the Trump administration would “make it more easily and more affordable to make things in the United States again.” Write to Bertrand Benoit at [email protected] and Kim Mackrael at [email protected] Catch all the business news, Market News, newsletters and latest news utensils on live currency.