Expert fears for total trade war

EU Tusk Merkel Trump Trade WarGermany's Angela Merkel and EU President Donald Tusk together with President Donald Trump. Photo: EU Council, 2017

Trade Expert fears for total trade war

A trade war between the US, Europe and China looms after Donald Trump announced a dramatic increase in steel and aluminum tolls. ARENA researcher and trade policy expert, Guri Rosén, fears that Norway as Europe’s largest aluminum producer will be hit hard.


US President Donald Trump has announced increased tolls on imports of steel (25 per cent) and aluminum (10 per cent) to the United States to live up to a major pledge from his electoral campaign to combat “unfair trade” and to protect US industrial workers.

Norway is Europe’s largest producer of raw aluminum with a production of about 1.2 million metric ton anually,  according to Norwegian Industry (Norsk Industri).

Well below 1 per cent of Norwegian aluminum and steel exports go to the United States, but the change will still be noticeable for large Norwegian companies such as Norsk Hydro.

But the most danger to Norway is how other countries will respond to Trump’s customs tariffs, says EU researcher and trade expert Guri Rosén at the ARENA Center for European Research, at the University in Oslo (UiO).

– Norway should be afraid that the major steel and aluminum exporters to the United States, especially China, will now turn their exports towards Europe. This will increase competition, which can pose a major problem for Norwegian industry. Many European jobs are at stake, especially if Trump’s measures are going to be permanent. I In addition, it will be severe for Norwegian companies if other countries respond by introducing corresponding protectionist measures. Then the trade war is truly under way! Says Rosén.

World Trade Organization

The EU, represented by Trade Commissioner Cecilia Malmström, has made it clear that they will bring the case before the World Trade Organization (WTO).

– In 2002, President Bush introduced similar changes in steel tariffs, which the WTO decided was illegal. But the challenge is that Trump justifies the dramatic change in customs tariffs with national security, and then WTO has a problem. The introduction of trade-restricting measures for reasons of national security is permitted. The United States can thus claim that this is not a matter for the WTO panel. And it is unlikely that the WTO panel will doubt the US’s justification for increasing the tariffs. That makes it harder for the EU and Norway to appeal to the WTO, Rosén says.

– One might imagine that the EU threatens to impose penalties on American goods, including iconic American brands such as whiskey from Kentucky, Florida juice and Harley-Davidson motorcycles. It is equally important for the EU to protect itself against increased pressure on the European market. As a result of the increased US tariffs there is a real danger that the steel sector – where there is significant global overproduction – will turn to the EU. Within the WTO, it is possible to provide so-called safeguards if the import of a product suddenly increases dramatically. This implies that the EU introduces restrictions on steel and aluminum purchases from all over the globe – including Norway, says Rosén.

Norwegian Strategy

The question people are now asking is if any individual country gets an exception when the measures come into force next week. In 2002, as an example, Canada and Mexico were exempt from the increases in the tariffs. Rosén believes some countries are hoping for the possibility that there may be exceptions. Maybe even for Norway?

– One would expect the Ministry of Industry to signal a Norwegian strategy fairly quickly. Threats of countermeasures are less effective from Norway than from the EU, but may Norway negotiate exceptions? It is equally important to keep an eye on what the EU is doing in the WTO. If the EU introduces safeguards, it will be very negative for Norwegian industry, says Rosén.


© UiO / #Norway Today

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