(source: Courtesy of USSK)
The imposition of tariffs on imports of steel and aluminium from the European Union (EU) to the US is bad news for international trade. Analysts believe that while it would not have any fundamental impact on Europe’s economy, they are getting nervous.
“In general, the aggregate economic impact of US tariffs on imports of steel and aluminium and counter-measures by the EU will be imperceptible for both economies,” said J&T Banka analyst Stanislav Pánis, as cited by the TASR newswire. “This is because the tariffs concern less than 0.5 percent of the eurozone’s exports to the USA and the EU’s reciprocal measures will affect a negligible volume of imports.”
He did not expect any significant impact to Slovakia’s economy either.
“An ordinary consumer in Slovakia and the Slovak economy as such will in general not discern the currently announced measures and counter-measures,” said Pánis.
Last Thursday, May 31, US President Donald Trump announced that the US would impose 25 percent duty on steel and 10 percent on aluminium imported from the EU, Canada and Mexico. The move follows earlier metals tariffs on countries around the world. The EU responded that it will impose retaliatory tariffs on the €2.8 billion euros of American imports.
The tariffs are not expected to have a direct impact on the steel maker U.S. Steel Košice (USSK) as the total import of steel and iron from Slovakia to the U.S. is small.
A bigger problem is Europe as a whole. This is because if the demand for steel from European steelmakers decreases, this may result in a drop in prices. This will affect USSK because this will increase its competition. In 2016 Europe exported steel worth 23.3 billion US dollars to the U.S.
“It may happen that some companies supplying large volumes to the U.S. will re-direct a portion of their supplies to Europe,” said Ján Bača, USSK’s spokesperson, as cited by the Sme daily.
Import tariffs on cars
A much bigger problem for Slovakia and Europe would be if US President Donald Trump fulfils his promise and increases tariffs on cars. Trump indicated that the current tariffs on cars may rise from 2.5 percent to 10 percent.
Out of the three carmakers active in Slovakia only Volkswagen Slovakia exports cars directly to the U.S. Volkswagen exported to the U.S. 20 percent of its car production, almost 362,000 vehicles, in 2017, the Sme daily wrote.
In 2016 Slovakia exported cars worth about €1 billion to the U.S.. This made up more than 1.5 percent of Slovakia’s total exports. EU car exports to the U.S. were worth €37.7 billion.
