Europe Puts Steel In Its Demands, May Scupper Talks for 2019 — Panjiva


Europe Puts Steel In Its Demands, May Scupper Talks for 2019

Ags - Grains/Beans 167 Ags - Meat/Dairy 138 Cons. Discr. - Autos 675 European Union 413 Materials - Metals/Mining 495 Metals - Aluminum 163 Metals - Steel 368 Trade Deals 707 U.S. 3358

The European Union has set a series of conditions on its plans to continue negotiations with the U.S. regarding a potential free-trade deal. These include the removal of section 232 duties on steel (at a rate of 25%) and aluminum (10%) as well as exemption from planned duties on the automotive sector. Indeed, the Commission reportedly already has plans for retaliatory duties should the U.S. apply automotive duties, Euractiv reports.

The EU has also reiterated that the agriculture sector should not be included in talks. As outlined in Panjiva’s research of Jan. 2 talks with the EU are still at a very preliminary stage despite having been initiated at a meeting between President Donald Trump and EC President Jean Claude Juncker in July 2018. Indeed, forthcoming EU parliamentary elections – and subsequent reformation of the European Commission – alongside complications from Brexit may mean talks struggle to make substantial progress until 4Q 2019.

Panjiva data shows that the argument over metals may be missing the point – bilateral trade in steel and aluminum was worth $18.1 billion in the 12 months to Oct. 31, or 1.7% of the $797.7 billion of trade between the two countries. The U.S. may also be unwilling to cede ground given it would face similar demands from Japan for their ongoing trade talks and is already facing pressure from Canada to cut tariffs as part of the USMCA accession process.

Autos are more substantive – they represent 9.2% of total trade between the two countries. The desire from the U.S. side to include agriculture makes sense given it already has a $4.0 billion surplus in agricultural trade and saw 15.6% growth in exports in the 12 months to Oct. 31 vs. a year earlier as a result of increased EU soybean purchases.


Chart segments U.S.-EU bilateral trade by product (HS-2 definition) on a trailing 12 month total basis.  Source: Panjiva

A cessation of tariffs on metals – and for that matter autos – would be a necessary part of a trade deal in any event assuming it is designed to primarily be a tariff-related deal. In the meantime EU exporters have already cut the shipments to the U.S. as a result of tariffs.

Among the major exporters ArcelorMittal cut its shipments by 23.8% in 4Q 2018 compared to a year earlier, ThyssenKrupp reduced exports by 18.8% and SSAB by 14.3%. Should the tariffs be removed selectively for EU producers they could gain the most as shipments normalize.


Chart segments U.S. imports of steel and aluminum by shipper on a trailing three-month total basis.  Source: Panjiva

PANJIVA RESEARCH is a service provided by Panjiva, Inc. ("Panjiva") to relevant global subscribers, and are deemed to be Panjiva "Services" subject to the Panjiva Terms & Conditions of Use. Information contained within or made available via the Services is for informational purposes only and nothing in the Services shall constitute or be construed as an offering of financial instruments, or as investment advice or recommendations by Panjiva, Inc. or its affiliates of an investment strategy or whether to "buy", "sell" or "hold" an investment. The Services may include views and commentary about customers of Panjiva. No aspect of the Services is based on consideration of your individual circumstances, and you should determine on your own whether you agree with the information contained within or made available via the Services. Employees involved in Panjiva Research may hold positions in securities analyzed or discussed in the Services. Panjiva does not make any express or implied warranties, representations, endorsements or conditions with respect to the Services and the information contained within or made available via the Services, including without limitation, warranties as to the usefulness, completeness, accuracy, currentness, reliability or sufficiency of any information (including, without limitation, conclusions, statements, opinions, estimates, forecasts or projections of any kind) and expressly disclaims any implied warranties. Neither this disclaimer nor any of its contents may be forwarded or redistributed without the prior written consent of Panjiva. © 2019 Panjiva, Inc. All Rights Reserved.