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May 31, 2018 12:00 am | FILED UNDER: business

Steel Union Bashes Trump Over Protectionist Customs Duties

By ČTK czech steel plant

Prague, May 31 (CTK) – By imposing customs duties on steel from the EU, US President Donald Trump continues attacking the global free trade system, the Czech Steel Union said in reaction to today’s decision of the White House.

 

The Chamber of Commerce noted that the USA itself owes its development and economic strength to free trade. Protectionist measures are a step backwards, it said.

 

“It is hard to understand because Trump attacks the closest allies at a time when he needs them in his fight against China’s mercantilism and unfair business practices ranging from intellectual property theft to curtailing investor rights,” the Steel Union’s executive director Daniel Urban said today.

 

The decision will have an impact also on Czech steel producers, he added.

 

US Secretary of Commerce Wilbur Ross said today that the USA will start imposing customs duties at 25 percent on steel and 10 percent on aluminium also on imports from the EU, Canada and Mexico as of Friday.

 

The USA introduced new customs duties on steel and aluminium on March 23. Thus far, the EU has had an exception. It has warned that if the customs duties are imposed on its steel and aluminium products, it will adopt retaliatory measures.

 

The US measures go beyond reasonable and acceptable risks to mutual trade relations, said Industry and Trade Minister Tomas Huner.

 

“This will most probably lead to a trade war between two strong trading blocs. No one can tell now where these steps will end,” he said.

 

Prime Minister Andrej Babis also talked about a trade war. “This trade war between the USA and Europe will harm everyone. Europe has to defend its interests on the floor of the WTO [World Trade Organisation],” he said.

 

“This is a big blow to the liberalisation of world trade. I firmly believe that return to talks will come in a foreseeable future to prevent escalation of this trade dispute,” Confederation of Industry president Jaroslav Hanak said today.

 

“Trade war makes no sense,” CMKOS umbrella union head Josef Stredula said on Twitter.

 

“The customs duties will, of course, harm the competitiveness of our steel on the US market and at the same time will raise the prices of inputs for US buyers who have no replacement for special types of steel from Europe,” Tomas Teluch, president of steel tube association AVOT, said today.

 

Czech firms exported steel products for Kc5bn to the USA last year, some 130,000 tonnes of these products, said the Chamber of Commerce.

 

“The USA is not a key export market for us, 80 percent of our steel exports target the EU and 3 percent the USA. Steel makers therefore fear the most that cheap steel products from other countries will flow to us, in particular from China,” said the chamber’s spokesman Miroslav Diro.

 

Trinecke zelezarny ironworks will certainly feel the impact of the US customs duties, spokeswoman Petra Mackova Juraskova told CTK today.

 

Its exports to the USA are in the order of percents. The company will cover the shortfall with exports to European markets where demand is high thanks to the construction of infrastructure, she said.

 

“From a long-term point of view, however, it may be a problem for the European market. It is possible that what is not sold in America will be pushed to Europe, she noted.

 

Ludek Prochazka, CEO of Gerlach company which provides customs services to the main Czech importers and exporters, told CTK that the customs duties’ impact can be expected also on car producers.

 

“Many Czech sub-suppliers have strong ties to the German automotive industry. And for companies like Volkswagen, Daimler and BMW, the US market is key,” he added.

 

Cyrus chief economist Lukas Kovanda sees the customs duties as bad news for the Czech economy and other EU economies.

 

In the end, it will be bad news also for the US economy. Workers in the US steel industry will benefit from it but US car makers will have to buy more expensive domestic steel instead of cheaper Chinese steel, he noted.

 

The Czech Republic will rank among the EU countries harmed relatively a lot by the measure because the domestic economy is small and open, highly dependent on foreign trade, Kovanda said.

 

“Other small open economies in the region, like Hungary and Slovenia, will be affected is a similar way. It is thus evident that the trade war, which begins tomorrow, will have no winners, only those who will lose less and those who will lose more,” he added.

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