Europe 'in battle mood' over Trump's steel threat

The prevailing sentiment was that the investigation's results would give Donald Trump the opportunity to crack down on steel imports, and that is an opportunity he would most likely capitalize on.

President Trump on Sunday declared his trip to the G20 leaders summit a "great success for the US", saying on Twitter he had "explained" to his counterparts that the intent on improving its trade deals.

"A number of EU countries may be affected by a US measure, certainly more than countries such as China for which steel exports to the USA have mostly been blocked by massive anti-dumping actions", the European Steel Association, known as Eurofer, said.

Ahead of the summit, the White House was close to making a decision, but top Trump administration advisers slowed the process down at the last minute, convincing Trump to meet with other world leaders at the G-20 before deciding how to proceed. On climate change, the US was again isolated, with all 19 other members agreeing that the Paris agreement on cutting emissions was "irreversible".

Trump's administration is weighing whether to impose tariffs, quotas or a combination of both on steel imports under national security grounds through Section 232 of the Trade Expansion Act, even though only a fraction of US steel is used for defense.

Also, invoking national security is all but taboo at the World Trade Organisation, the arbiter of global trade rules, because it is largely seen as a way to wage economic warfare by citing arbitrary defense concerns. They are hoping to galvanize other countries at the G-20 to work together to confront China over its government support for the domestic steel industry, with the idea that joint pressure could be more effective and remove the possibility that the United States has to move alone. Juncker said that Europe expects to increase its exports to Japan by a third after trade barriers drop away.

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The Trump administration argues the USA has become too dependent upon foreign steel for its infrastructure and military equipment. "It also remains to be seen what the American president brings (to the meeting)".

During his four-day trip, Trump would travel to Poland and then to Germany to attend the G-20 Summit which among others is being attended by Prime Minister Narendra Modi.

US steel prices are firm so far this week, holding onto their value despite the passing of the "deadline" for the Commerce Department's Section 232 investigation results last Friday. For example, U.S. Steel went up 8% in June.

Trade analysts expect G-20 leaders to persuade Trump to eschew national security tariffs on steel and aluminum because of the blow-back effect they could have on the stability of the worldwide trading system. "I think that there are some concerns about the systemic implications about going down that route for the global trading system".

This move now is not surprising that Trump made free trade as the central topic of his campaign after he finished criticizing China, Japan and Mexico.

The unprecedented move marks the first time any WTO member has ever cited Article 21 of the General Agreement on Tariffs and Trade as a justification for their actions in a WTO meeting.