US President Donald Trump has announced that he intends to raise import tariffs on steel and aluminium. This will affect all countries that export steel and aluminium to the USA. The President will be giving details on the planned tariffs next week.

The German government will be examining the decisions very closely and assessing the impacts on the German and European economy, explained government spokesperson Steffen Seibert. In future too, the German government will work for free trade and open markets, and will remain in dialogue with the USA on these points. "We have repeatedly stressed the fact that we have a major interest in a vibrant, fair, free economic and trading partnership with America."

Unilateral measures damage everyone

The German government rejects the planned tariffs. "They would seriously affect international trade and our steel and aluminium industry," said Steffen Seibert. The problem of global over-capacity cannot be resolved with unilateral measures. Isolationism and protectionism are the wrong path to take.

The European Commission – which is responsible for European trade matters – intends to take action against the planned punitive tariffs. It has rightly expressed Europe’s concerns and made clear any reactions that might be necessary, said Steffen Seibert. Jean-Claude Juncker, President of the European Commission, announced on Thursday, "We will not stand by and watch our industry being hit by unfair measures." Thousands of European jobs are at risk, he declared.

Federal Minister for Foreign Affairs, Sigmar Gabriel, also expressed his concern. "Our exports and jobs would be amongst those hardest hit by such an all out US measure." The EU must "respond resolutely". He expressed his hope that Donald Trump would reconsider his decision. "We must do everything we can to avoid an international trade war."

Addressing over-capacity together

The background to the dispute over punitive tariffs is the global over-capacity in the steel and aluminium industry. Steel production alone has risen by 127 per cent since 2000, but demand has not kept pace. Asian countries in particular are flooding the world market with cheap steel and creating more over-capacity than the United States needs.

But European countries too are having problems with the rising volume of steel on the world market, which is resulting in drastically lower prices. This is impacting adversely on the economic situation of the steel industry in Germany and in Europe. The German government is thus working to put in place fair conditions for competition worldwide and to reduce existing imbalances. During Germany’s G20 Presidency, the German government thus pushed ahead with the work of the Global Forum on Steel Excess Capacity, and achieved major progress.

The Global Forum on Steel Excess Capacity was set up in 2016 following a resolution adopted by the heads of state and government at the G20 summit in Hangzhou (China). Since then the Organisation for Economic Co-operation and Development (OECD) has been actively supporting the work process. Under Germany’s G20 Presidency, the states involved detailed future steps and reaffirmed the goals of the Forum. In dialogue they aim to elaborate common solutions for the steel industry and address the existing imbalance on global steel markets.