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Winnipeg Free Press
16 hours ago
- Business
- Winnipeg Free Press
Higher US tariffs part of the price Europe was willing to pay for its security and arms for Ukraine
BRUSSELS (AP) — France's prime minister described it as a 'dark day' for the European Union, a 'submission' to U.S. tariff demands. Commentators said EU Commission chief Ursula von der Leyen's handshake with President Donald Trump amounted to capitulation. The trouble is, Europe depends mightily on the United States, and not just for trade. Mirroring Trump, Von der Leyen gushed that the arrangement she endorsed over the weekend to set U.S. tariff levels on most European exports to 15%, which is 10% higher than currently, was 'huge.' Her staff texted reporters insisting that the pact, which starts to enter force on Friday, is the 'biggest trade deal ever.' A month after NATO Secretary-General Mark Rutte ingratiated himself with Trump by referring to him as 'daddy,' the Europeans had again conceded that swallowing the costs and praising an unpredictable president is more palatable than losing America. 'It's not only about the trade. It's about security. It's about Ukraine. It's about current geopolitical volatility. I cannot go into all the details,' EU Trade Commissioner Maroš Šefčovič told reporters Monday. 'I can assure you it was not only about the trade,' he insisted, a day after 'the deal' was sealed in an hour-long meeting once Trump finished playing a round of golf with his son at the course he owns in Scotland. The state of Europe's security dependency Indeed, Europe depends on the U.S. for its security and that security is anything but a game, especially since Russia invaded Ukraine. U.S. allies are convinced that, should he win, President Vladimir Putin is likely to take aim at one of them next. So high are these fears that European countries are buying U.S. weapons to help Ukraine to defend itself. Some are prepared to send their own air defense systems and replace them with U.S. equipment, once it can be delivered. 'We're going to be sending now military equipment and other equipment to NATO, and they'll be doing what they want, but I guess it's for the most part working with Ukraine,' Trump said Sunday, sounding ambivalent about America's role in the alliance. The Europeans also are wary about a U.S. troop drawdown, which the Pentagon is expected to announce by October. Around 84,000 U.S. personnel are based in Europe, and they guarantee NATO's deterrent effect against an adversary like Russia. At the same time, Trump is slapping duties on America's own NATO partners, ostensibly due to concerns about U.S. security interests, using Section 232 of the Trade Expansion Act, a logic that seems absurd from across the Atlantic. Weaning Europe off foreign suppliers 'The EU is in a difficult situation because we're very dependent on the U.S. for security,' said Niclas Poitiers at the Bruegel research institution in Brussels. 'Ukraine is a very big part of that, but also generally our defense is underwritten by NATO.' 'I think there was not a big willingness to pick a major fight, which is the one (the EU) might have needed with the U.S.' to better position itself on trade, Poitiers told The Associated Press about key reasons for von der Leyen to accept the tariff demands. Part of the agreement involves a commitment to buy American oil and gas. Over the course of the Russia-Ukraine war, now in its fourth year, most of the EU has slashed its dependence on unreliable energy supplies from Russia, but Hungary and Slovakia still have not. 'Purchases of U.S. energy products will diversify our sources of supply and contribute to Europe's energy security. We will replace Russian gas and oil with significant purchases of U.S. LNG, oil and nuclear fuels,' von der Leyen said in Scotland on Sunday. In essence, as Europe slowly weans itself off Russian energy it is also struggling to end its reliance on the United States for its security. The Trump administration has warned its priorities now lie elsewhere, in Asia, the Middle East and on its own borders. That was why European allies agreed at NATO's summit last month to spend hundreds of billions of dollars more on defense over the next decade. Primarily for their own security, but also to keep America among their ranks. The diplomacy involved was not always elegant. 'Europe is going to pay in a BIG way, as they should, and it will be your win,' Rutte wrote in a private text message to Trump, which the U.S. leader promptly posted on social media. Rutte brushed off questions about potential embarrassment or concern that Trump had aired it, saying: 'I have absolutely no trouble or problem with that because there's nothing in it which had to stay secret.' A price Europe feels it must pay Von der Leyen did not appear obsequious in her meeting with Trump. She often stared at the floor or smiled politely. She did not rebut Trump when he said that only America is sending aid to Gaza. The EU is world's biggest supplier of aid to the Palestinians. With Trump's threat of 30% tariffs hanging over European exports — whether real or brinksmanship is hard to say — and facing the prospect of a full-blown trade dispute while Europe's biggest war in decades rages, 15% may have been a cheap price to pay. Monday Mornings The latest local business news and a lookahead to the coming week. 'In terms of the economic impact on the EU economy itself, it will be negative,' Poitiers said. 'But it's not something that is on a comparable magnitude like the energy crisis after the Russian invasion of Ukraine, or even COVID.' 'This is a negative shock for our economy, but it is something that's very manageable,' he said. It remains an open question as to how long this entente will last. ___ Mark Carlson in Brussels contributed to this report.
16 hours ago
- Business
Higher US tariffs part of the price Europe was willing to pay for its security and arms for Ukraine
BRUSSELS -- France's prime minister described it as a 'dark day' for the European Union, a 'submission' to U.S. tariff demands. Commentators said EU Commission chief Ursula von der Leyen's handshake with President Donald Trump amounted to capitulation. The trouble is, Europe depends mightily on the United States, and not just for trade. Mirroring Trump, Von der Leyen gushed that the arrangement she endorsed over the weekend to set U.S. tariff levels on most European exports to 15%, which is 10% higher than currently, was 'huge.' Her staff texted reporters insisting that the pact, which starts to enter force on Friday, is the 'biggest trade deal ever.' A month after NATO Secretary-General Mark Rutte ingratiated himself with Trump by referring to him as 'daddy,' the Europeans had again conceded that swallowing the costs and praising an unpredictable president is more palatable than losing America. 'It's not only about the trade. It's about security. It's about Ukraine. It's about current geopolitical volatility. I cannot go into all the details,' EU Trade Commissioner Maroš Šefčovič told reporters Monday. 'I can assure you it was not only about the trade,' he insisted, a day after 'the deal' was sealed in an hour-long meeting once Trump finished playing a round of golf with his son at the course he owns in Scotland. Indeed, Europe depends on the U.S. for its security and that security is anything but a game, especially since Russia invaded Ukraine. U.S. allies are convinced that, should he win, President Vladimir Putin is likely to take aim at one of them next. So high are these fears that European countries are buying U.S. weapons to help Ukraine to defend itself. Some are prepared to send their own air defense systems and replace them with U.S. equipment, once it can be delivered. 'We're going to be sending now military equipment and other equipment to NATO, and they'll be doing what they want, but I guess it's for the most part working with Ukraine,' Trump said Sunday, sounding ambivalent about America's role in the alliance. The Europeans also are wary about a U.S. troop drawdown, which the Pentagon is expected to announce by October. Around 84,000 U.S. personnel are based in Europe, and they guarantee NATO's deterrent effect against an adversary like Russia. At the same time, Trump is slapping duties on America's own NATO partners, ostensibly due to concerns about U.S. security interests, using Section 232 of the Trade Expansion Act, a logic that seems absurd from across the Atlantic. 'The EU is in a difficult situation because we're very dependent on the U.S. for security,' said Niclas Poitiers at the Bruegel research institution in Brussels. 'Ukraine is a very big part of that, but also generally our defense is underwritten by NATO.' 'I think there was not a big willingness to pick a major fight, which is the one (the EU) might have needed with the U.S.' to better position itself on trade, Poitiers told The Associated Press about key reasons for von der Leyen to accept the tariff demands. Part of the agreement involves a commitment to buy American oil and gas. Over the course of the Russia-Ukraine war, now in its fourth year, most of the EU has slashed its dependence on unreliable energy supplies from Russia, but Hungary and Slovakia still have not. 'Purchases of U.S. energy products will diversify our sources of supply and contribute to Europe's energy security. We will replace Russian gas and oil with significant purchases of U.S. LNG, oil and nuclear fuels,' von der Leyen said in Scotland on Sunday. In essence, as Europe slowly weans itself off Russian energy it is also struggling to end its reliance on the United States for its security. The Trump administration has warned its priorities now lie elsewhere, in Asia, the Middle East and on its own borders. That was why European allies agreed at NATO's summit last month to spend hundreds of billions of dollars more on defense over the next decade. Primarily for their own security, but also to keep America among their ranks. The diplomacy involved was not always elegant. 'Europe is going to pay in a BIG way, as they should, and it will be your win,' Rutte wrote in a private text message to Trump, which the U.S. leader promptly posted on social media. Rutte brushed off questions about potential embarrassment or concern that Trump had aired it, saying: 'I have absolutely no trouble or problem with that because there's nothing in it which had to stay secret.' Von der Leyen did not appear obsequious in her meeting with Trump. She often stared at the floor or smiled politely. She did not rebut Trump when he said that only America is sending aid to Gaza. The EU is world's biggest supplier of aid to the Palestinians. With Trump's threat of 30% tariffs hanging over European exports — whether real or brinksmanship is hard to say — and facing the prospect of a full-blown trade dispute while Europe's biggest war in decades rages, 15% may have been a cheap price to pay. 'In terms of the economic impact on the EU economy itself, it will be negative,' Poitiers said. 'But it's not something that is on a comparable magnitude like the energy crisis after the Russian invasion of Ukraine, or even COVID.' 'This is a negative shock for our economy, but it is something that's very manageable,' he said. It remains an open question as to how long this entente will last.
The Journal
a day ago
- Business
- The Journal
Are pharmaceuticals part of the EU-US tariff deal? And what's Section 232 got to do with it?
THE EU'S PHARMACEUTICAL sector could be in line for 15% tariffs as the result of a 'Section 232' investigation in the US. US President Donald Trump and European Commission President Ursula von der Leyen clinched a deal late yesterday that includes a baseline US tariff of 15%. This agreement came just five days before the US was due to impose 30% tariffs on many European imports. Ursula von der Leyen and Donald Trump met at the Trump Turnberry golf course in Scotland. Alamy Stock Photo Alamy Stock Photo However, there was some confusion as to whether pharmaceuticals, which are currently tariff free, would come under these tariffs of 15%. Speaking yesterday, Trump said pharmaceuticals were not covered by the deal. 'Pharmaceuticals won't be part of it because we have to have them made in the United States,' said Trump. 'Pharmaceuticals are very special. We can't be in a position where we're relying on other countries. 'Europe is going to make pharmaceuticals, drugs and everything else for us too – a lot – but we're going to also have our own.' In a letter to the Trade Forum, Tánaiste Simon Harris said his understanding from von der Leyen is that the 'rate of 15% is a ceiling on any potential tariffs that may be imposed following the conclusion of the section 232 investigations'. 'In other words, any tariff would not increase beyond 15%,' Minister for Enterprise and Trade, Peter Burke, told RTÉ this morning. File image of Tánaiste Simon Harris Alamy Stock Photo Alamy Stock Photo He added: 'Von der Leyen has been very clear that 15% will be a ceiling, and Trump has been clear as well that there will be other areas that he can look at on pharmaceuticals. 'Pharmaceuticals are very complex and a lot of the product that is exported over to the US is not a complete product. 'Almost 70% of it is components of the final product that will come together. 'That's why we need to ensure that we have a very keen rate to ensure we incentivise innovation in that sector.' Section 232 investigation On 16 April, the Trump administration initiated new investigations into the imports of pharmaceuticals under Section 232 of the Trade Expansion Act . The purpose of a Section 232 investigation is to determine the effect of imports on US national security and whether certain imports 'threaten to impair' national security. Advertisement Such investigations are said to 'recognise the close relation of the economic welfare of the Nation to our national security'. The investigations also probe whether the 'displacement of US products by excessive imports' could result in 'substantial unemployment, decreases in government revenues, and/or loss of investment and skills'. In the context of pharmaceuticals, the investigation will look at the role of foreign supply chains in supplying the US market and the extent to which domestic US production can meet demand. The investigation will also probe potential attempts by foreign states to exert pressure by exploiting US dependencies in this sector. At the conclusion of this investigation, Secretary of Commerce Howard Lutnick is due to recommend possible trade policy measures on the sector, including the introduction of possible additional tariffs on pharmaceutical products. The Section 232 investigation was launched on 16 April and the Trade Expansion Act compels Lutnick to submit a report to Trump within 270 of initiating the investigation. It's expected that he will file this report within the next three weeks. File image of Trump with his Commerce Secretary Howard Lutnick Alamy Stock Photo Alamy Stock Photo If Lutnick determines that there is a threat to US national security, Trump has 90 days to decide whether he agrees, and if he agrees, whether to act. If Trump decides to act, he then has 15 days to implement that action. However, Trump could decide to enter into negotiations instead, should Lutnick report that there is a threat to US national security. In this scenario, if Trump enters into negotiations and no agreement is made after 180 days, or the agreement 'is not being carried out or is ineffective in eliminating the threat' to national security, Trump will take further action. Earlier this month, Trump claimed that tariffs on European pharmaceutical companies could be as much as 200%. And during Taoiseach Micheál Martin's St Patrick's visit to the White House, Trump said Martin was 'lucky' he wasn't president when US pharmaceutical companies moved to Ireland as he would have placed 200% tariffs on them. Trump's use of Section 232 Trump carried out seven Section 232 investigations during his first term and all but one found a threat to US national security. This resulted in tariffs on steel and aluminium in 2018, though this was later modified and some countries were granted exemptions. For other goods, Trump entered into negotiations with trading partners, though he didn't agree with his then-Commerce Secretary's assessment that there was a national security risk around uranium. In his second term, Trump has commenced Section 232 investigations once more on uranium, as well pharmaceuticals, critical minerals and rare earth elements. He has also revived a Section 232 investigation from his first term on cars and car parts, initiated new investigations on copper, timber, and semiconductors for manufacturing equipment, and also expanded Section 232 tariffs on steel and aluminium. Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. Learn More Support The Journal
National Post
5 days ago
- Business
- National Post
Trump's steel tariffs against Canada have been working just how he wants
For the hundreds of Canadian steelworkers who lost their jobs this year amid President Donald Trump's trade war, talk of reaching a trade deal between Canada and the U.S. is coming too little, too late. Article content For Trump, the effects — driving down imports, boosting the U.S. steel industry and winning concessions from Canada — seem to be getting him what he wants. Article content Initially faced with a 25 per cent tariff on exports to the U.S., which ballooned to 50 per cent in June, Canadian steel is desperate for a resolution. Trump imposed the levies under Section 232 of the Trade Expansion Act, declaring steel imports a threat to national security and citing the need to protect American industry. His rationale was that curbing imports would reduce supply and ramp up prices, giving U.S. steel additional revenue to invest in strengthening domestic production. Article content Article content Negotiating teams are staring down an Aug. 1 deadline, when Trump said he'll be hitting Canada with yet more tariffs — on top of the steel, aluminum, lumber, copper, autos, and energy already being whacked, as well as any goods not exempted by the U.S.-Mexico-Canada trade agreement (USMCA). Article content Article content So far, the Canadian steel industry has been one of the hardest hit by Trump's tariffs, and it's bracing for things to get uglier. Article content Article content 'By the end of May, before we even hit the 50 per cent tariffs, we saw a 30 per cent decline in production across the country,' said Catherine Cobden, president and CEO of the Canadian Steel Producers Association (CSPA). She doesn't have the June numbers yet, but she expects it be 'much worse.' Article content Article content Canadian producers can't afford to absorb the 50 per cent tariff on six million tonnes of production, the amount that was destined for the U.S. market and is now subject to the levy, Cobden explains. Article content While some analysts expected the U.S. market to keep buying heavily taxed Canadian steel to satisfy demand until domestic production increased to fill the gap, that's not playing out in practice. At least not yet.
Vancouver Sun
5 days ago
- Business
- Vancouver Sun
Trump's steel tariffs against Canada have been working just how he wants
For the hundreds of Canadian steelworkers who lost their jobs this year amid President Donald Trump's trade war, talk of reaching a trade deal between Canada and the U.S. is coming too little, too late. For Trump, the effects — driving down imports, boosting the U.S. steel industry and winning concessions from Canada — seem to be getting him what he wants. Initially faced with a 25 per cent tariff on exports to the U.S., which ballooned to 50 per cent in June , Canadian steel is desperate for a resolution. Trump imposed the levies under Section 232 of the Trade Expansion Act, declaring steel imports a threat to national security and citing the need to protect American industry. His rationale was that curbing imports would reduce supply and ramp up prices, giving U.S. steel additional revenue to invest in strengthening domestic production. About US$7.7 billion ($10 billion) in Canadian steel and iron was exported to the U.S. last year, with the American market worth 90 per cent of Canadian exports. Start your day with a roundup of B.C.-focused news and opinion. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Sunrise will soon be in your inbox. Please try again Interested in more newsletters? Browse here. While Prime Minister Mark Carney's team has been trying to get the steel tariffs lifted, he has lately tried managing expectations, publicly acknowledging that any trade deal will likely involve tariffs . Negotiating teams are staring down an Aug. 1 deadline, when Trump said he'll be hitting Canada with yet more tariffs — on top of the steel, aluminum, lumber, copper, autos, and energy already being whacked, as well as any goods not exempted by the U.S.-Mexico-Canada trade agreement (USMCA). With the deadline less than a week away, Trade Minister Dominic LeBlanc was in Washington on Thursday for the latest trade discussions. The talks, said one Canadian government source, who spoke on condition of anonymity, ' have been volatile.' So far, the Canadian steel industry has been one of the hardest hit by Trump's tariffs, and it's bracing for things to get uglier. 'By the end of May, before we even hit the 50 per cent tariffs, we saw a 30 per cent decline in production across the country,' said Catherine Cobden, president and CEO of the Canadian Steel Producers Association (CSPA). She doesn't have the June numbers yet, but she expects it be ' much worse.' Canadian producers can't afford to absorb the 50 per cent tariff on six million tonnes of production, the amount that was destined for the U.S. market and is now subject to the levy, Cobden explains. While some analysts expected the U.S. market to keep buying heavily taxed Canadian steel to satisfy demand until domestic production increased to fill the gap, that's not playing out in practice. At least not yet. 'The customers on the other end aren't always willing or able to pay, and they expect the steel companies to absorb that,' Cobden said. 'I talk to our members every day, and the situation is that the order books, for those shipments to the United States, are essentially drying up.' So far, the downturn has led to more than 1,000 industry layoffs, said Cobden. She said she now fears that the problems will continue to mount as investment dries up and the industry shrinks. In Trump's first term in 2018, U.S. steel ramped up production after the president hit Canadian imports with tariffs of 25 per cent. It seems to be happening again. According to the American Iron and Steel Institute (AISI), which supports tariffs, U.S. mills have been churning out steel at historic rates. In mid-June, weekly raw steel production hit a three-year peak, and the mill capacity utilization rate has averaged around 76.2 to 78 per cent. If it can be sustained near the 78 per cent mark, it will have exceeded last year's 76.4 per cent, edging closer to the 80 per cent benchmark the Commerce Department wants. Imports, meanwhile, have dropped 6.2 per cent compared to this time last year. The 2018 tariffs also saw U.S. steelmakers invest over US$20 billion in modernization efforts, according to the Steel Manufacturers Association, and created 1,000 American jobs, according to the North American Industry Classification System, while saving others from disappearing. Other studies, however, have questioned the long-term effectiveness of tariffs for job creation. So far this year, the results have been mixed, with a few plant closings and nearly 2,000 job losses mixed with some paused productions and a few summer ribbon-cuttings. Other American industries are taking a hit, though. A lot of things are made with steel, so price increases impact loads of other industries, most notably automotive and housing. With steel-related input prices rising, the average American car price is expected to jump by nearly US$2,000. Housing construction is set to drop by four per cent, according to the National Association of Home Builders. Some analysts question the logic of disrupting supply lines and causing trade uncertainty in a bid to ramp up domestic production. Andrew Hale, a senior policy analyst at Heritage Foundation, acknowledges that the U.S. steel industry needs to modernize, but he says tariffs won't help solve the underlying problems. 'We have horrific regulations and zoning laws,' he says. 'All sorts of things prohibit us from building new blast furnaces for the production of refined steel.' 'There's so much red tape,' he adds, noting that it's impossible to quickly rejig supply lines, as Trump has suggested. Last week, Carney introduced new protections against offshore steel importers, with tariffs on even free-trade partners that export steel to Canada over a set quota, and a 25 per cent tax on any steel from any country – except the U.S. – that was originally melted and poured in China. These measures offer some help to the domestic industry, said the CSPA's Cobden. They're also a signal to Washington, which has long complained that Canada is a back door to the U.S. market for steel from China. But Cobden thinks Canada needs to be ready to hit the U.S. with tariffs, too, if there's no deal before Aug. 1. Still, she's optimistic that this war can't last forever. 'Over time, one has to believe (the U.S.) is going to have to start doing steel trade with somebody. And our hope is it will be Canadian steel companies,' she says. It's time to build big, build bold, and build the strongest economy in the G7 — using Canadian steel. Hale, at the Heritage Foundation, agrees, pointing to the level of integration between the countries and the shortfall in U.S. production. 'We created this whole NAFTA, now USMCA, trade area, and the whole auto industry and other industries were built around that to have this, effectively, single market,' he says. Trump has already pushed back tariff deadlines this year. In April, after he announced sweeping 'Liberation Day' global tariffs, the U.S. bond market collapsed and the S&P 500 plummeted to its lowest level since the pandemic . U.S. Treasury Secretary Scott Bessent pushed for a 90-day tariff pause. Markets are back to historic highs, but Hale says to watch for signs of market volatility again heading into next week. 'If you're going to lift the pause and implement these tariffs and maintain them, then the same thing could happen again,' he said. National Post tmoran@ Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark and sign up for our daily newsletter, Posted, here .
