EU retaliates against “unjustified and disruptive” US steel and aluminum tariffs

European Commission (EC) President Ursula von der Leyen has announced a response to the US’ 25% tariffs on steel and aluminum imports, unveiling counter tariffs on various packaging material imports from the US, including steel, aluminum, and plastic.

On March 12, the US imposed tariffs on EU steel and aluminum products. In response, the EC has launched a series of countermeasures to “protect” the bloc’s businesses, workers and consumers from these trade restrictions. The first step of the EU’s measures targets several US products, ranging from boats to bourbon and Harley-Davidson motorbikes. The second tariff phase will focus on steel, aluminum, plastic, and wood, among others. 

“Anyone who imports packaging from the US into the EU market could be hit by the EU duties as of mid-April, depending on the type of product we’re talking about. But a lot of paper, board, plastic packaging, and raw materials from the US would be impacted,” Eamonn Bates, secretary general at 360° Foodservice, the EU association for the foodservice packaging value chain based in Brussels, Belgium, tells Packaging Insights. 

The EU says its countermeasures are a response to what it views as “unjustified and disruptive” US import tariffs on EU steel and aluminum products. 

“We deeply regret this measure. Tariffs are taxes. They are bad for business and even worse for consumers. These tariffs are disrupting supply chains. They bring uncertainty for the economy,” comments von der Leyen.

“Jobs are at stake. Prices will go up. In Europe and in the US.”

Two-step retaliation 

The EU’s countermeasures will be implemented in two steps. First, the EC will allow the suspension of existing 2018 and 2020 countermeasures against the US to lapse on April 1. These countermeasures target a range of US products “that respond to the economic harm done” on €8 billion (US$8.7 billion) of EU steel and aluminum exports, says the EC.

Second, in response to new US tariffs — affecting more than €18 billion (US$19.5 billion) of EU exports — the EC says it is putting forward a package of new countermeasures on US exports. These will reportedly be enforced by mid-April, following consultation of member states and stakeholders.

Bates predicts US paper, board, plastic packaging and raw materials to be impacted by the EU’s counter tariffs.By mid-April, the EU will furthermore impose a “fresh round” of countermeasures in response to the US tariffs. These will affect US exports valued at up to €18 billion, bringing the total EU response to €26 billion (US$28.2 billion), matching the extent of the US tariffs.

The target products for this second phase include industrial products such as steel and aluminum, textiles, leather goods, home appliances, house tools, plastics, and wood products. It will also include agricultural products like poultry, beef, certain seafood, nuts, eggs, dairy, sugar, and vegetables.

Bates is expecting paper- and plastic-based foodservice packaging from the US to be hit by higher levies. “What we don’t want to see is good quality US goods being replaced in the EU market by non-compliant stuff from some Asian countries, we already have far too much of that.”

“Good old-fashioned trade war”

The EU measures will also cover US-sourced packaging materials — pulp and kraft liner and a range of plastics sheets, foils and films are on the list. 

Bates expects some EU-based manufacturers to be impacted by higher costs in their supply chains, “which may force switches to alternative suppliers. It’s an opportunity for European producers but also for Asian or Latin American players to step in.”

But he continues by saying that it is not yet clear at what level the higher tariffs will be set but importers will either have to absorb the duties and lose margin or pass them on in higher prices and perhaps lose markets as a result. “Either way it’s uncomfortable for those impacted.”

“While the EU tariffs are bad news for importers of US packaging products and packaging materials, some EU producers may find that they have new opportunities to step in and grab new business at the expense of their US competitors.”

“President Trump doesn’t want to be an ‘April fool’ and has already said he’ll parry the EU’s duties on jeans, bourbon whiskey, and Harley Davidson bikes, with another round of US tariffs on April 2. This is good old-fashioned trade war stuff. On balance, everyone tends to lose out.”

“Anything could happen”

One month ago, President Trump signed an executive order imposing a 25% tariff on imports of steel, aluminum, and related derivative products, affecting approximately €26 billion (US$28.2 billion) worth of EU exports.

At the time, the EU condemned the move, stating that it would not hesitate to retaliate if the US proceeded with the new tariffs.

The EU, particularly Germany, is a major steel exporter to the US. During Trump’s first term, the EU responded to similar tariffs with €2.8 billion (US$3 billion) in duties on US goods.

“As Trump already knows what is coming in the EU’s mid-April sanctions, maybe the US will preempt the Europeans by slapping tariffs on some of the product categories on the EC’s hit list that are shipped from the EU to the US. Could EU packaging exports take a hit as a result, who knows? — we can only speculate, anything could happen.”

For now, von der Leyen says the EU will remain open to negotiation. “We firmly believe that in a world fraught with geopolitical and economic uncertainties, it is not in our common interest to burden our economies with tariffs. We are ready to engage in meaningful dialogue.”