President Trump has decided to give key allies more time to negotiate trade deals with the United States prior to the instigation of tariffs on steel. Currently, China, Russia, and Japan face the brunt of steel tariffs from the 45th President’s administration. American allies in the European Union (EU) have been issued a reprieve on their tariffs for the time being and are waiting to negotiate the final details of a more favorable trade deal. Tensions within the EU continue to create conflict over trade negotiations among member countries; the 2015-2016 rise in populism in Eastern Europe and Italy, and the subsequent populist appeal of many European leaders have made trade deals more difficult to negotiate.
Trump's reasoning for steel tariffs mainly involves protecting U.S. steel industries and preventing Asian competitors like China from dumping poor quality steel into U.S. markets. Dumping tends to undercut the American market and make local steel producers less competitive. Trump intends to fulfill his promise by protecting American trade with his aggressive stance toward foreign trade ambitions in the U.S. In the past, the EU has threatened the U.S. with retaliation against tariffs; however, there has been a lull in threats as both parties return to the negotiation table.
Meanwhile, steel imports in the EU are rising similarly to those in the U.S. Europe is now considering imposing restrictions on foreign steel imports. The decision to loosen steel tariffs for allies gives Trump and his administration some leeway for negotiation. On the one hand, he can pressure China by preventing the dumping of Chinese goods into the U.S. and following through with his protectionist, 'America First' vision. At the same time, Trump can also increase tension with his European allies in order to keep NATO countries in line with his vision of a stronger America. Nevertheless, if Trump chooses to impose retaliatory tariffs against the EU in response to the EU's threat of enforcing tariffs on American goods, any protectionist policy put in place by the EU would vindicate many populist movements within the Union and outside of it. It could potentially lead to trade wars, or at the very least, cause an increase in U.S. tariffs for EU goods.
