EU cautiously welcomes Trump tariff exemption

BRUSSELS: EU leaders cautiously welcomed a US decision to grant Europe a last-minute exemption from punishing metals tariffs, but remained wary of potential conditions set by President Donald Trump.

In the US capital, US Trade Representative Robert Lighthizer told a Senate panel that Trump had authorised a "pause" in the controversial tariffs while talks are under way to find a more permanent solution.

Trump shocked the world with his sudden announcement earlier this month of a 10-percent levy on aluminium and 25-percent tariff on steel, angering Washington's closest allies that swiftly called for an exemption.

Lighthizer said Argentina, Australia, Brazil, Canada, Mexico and South Korea will also be exempt from the penalties, along with the EU. Trump has already promised to spare both Canada and Mexico — the United States' closest trade partners.

"The news we are hearing from Washington is rather positive, but we will have to wait for Trump's actual decision," said Luxembourg's Prime Minister Xavier Bettel on the sidelines of an EU summit in Brussels.

The US trade official made his announcement just hours before the tariffs were to kick in, raising tensions with the EU to a maximum and leaving doubts that the decision was properly backed by Trump.

"We have still not received what we consider to be the official confirmation of the exemption. This would have to be some sort of executive order signed by the President, that would replace the existing tariff order," an EU official said.



If confirmed, a major worry for Europeans was the conditions Trump was to link to the exemption, after repeated warnings by the US leader that Europe treated Washington unfairly.

"The question is whether this exemption is subject to conditionality," Belgian Prime Minister Charles Michel.

The apparent climbdown came as Trump announced new sanctions against China, for the "theft" of US intellectual property which Beijing has vowed to meet with tit-for-tat retaliation.

China is seen by as the root cause for a massive oversupply of steel on the global market, and Europeans in recent days pressed that point with Washington

EU Trade Commissioner Malmstrom made the EU's case over two days this week in Washington, negotiating the carve-out with US Commerce Secretary Wilbur Ross, a strong backer of Trump's "America First" policies.

Arriving at the EU summit, German Chancellor Angela Merkel said "thanks" to Malmstrom "for holding intensive talks with the United States and we will see what the result is."

As a precaution, the commission has drawn up a list of potential counter-measures, including tariffs on peanut butter and Harley Davidson motorcycles, in case Trump follows through.

"We have made it clear that we do not want a trade war. Trade war is of no use to anyone," said Jean-Claude Juncker, chief of the European Commission, which handles trade talks for the 28 member states.

German Economy Minister Peter Altmaier stressed in Berlin that "fighting until the last minute is worth it", with Germany especially worried about its auto industry.

The close confidant of Merkel reported a "very positive impression" of US Commerce Secretary Ross, who he also met earlier this week in Washington for last-minute talks.

"We both know what the problem is," Altmaier said, pointing the finger instead at China.