Steel war tension as US imposes tariffs

Over-production of steel has led to trade wars

A bitter trade battle between the United States and its commercial rivals intensified on Wednesday as controversial US tariffs on imported steel came into effect.

Within hours, Japan became the latest country to file a complaint against the tariffs at the World Trade Organisation (WTO) in Geneva.

Japanese trade minister Takeo Hiranuma warned his country may retaliate with measures to protect its own steel industry.

EU Trade Commissioner Pascal Lamy said late on Tuesday that it would be "a question of days" before the EU issued quotas on steel imports to prevent its own industry being damaged by steel redirected from US markets.

The US has unilaterally imposed tariffs of up to 30% on imported steel for three years, claiming that other countries are "dumping" steel at below the cost of production and damaging its domestic industry.

Steel jobs

US: 175,000 employees,
20,000 jobs lost in past four years

UK: 26,500 employees,
10,000 jobs lost

Germany: 85,200 employees,
7,900 jobs lost

EU: 299,600 employees,
22,200 jobs lost

But the claim is bitterly disputed by the European Union, Japan, and other steel producers, which say their firms are just more efficient than American producers.

With growing job losses throughout the industry, the EU and Brazil have demanded compensation from the US for lost imports and threatened to impose retaliatory tariffs of their own.

South Korea will also lodge a formal complaint with the WTO this week though officials will hold further talks with the US, an official at the Ministry of Foreign Affairs and Trade said.

Meanwhile China is also preparing to launch its first WTO complaint since joining the global trade body late year, though a delegation will first travel to the US for talks this week.

George W Bush: Responded to domestic pressure on steel

US ambassador Linnet Deily has warned his country's critics that calls for "immediate compensation backed by threats of unilateral trade retaliation" would be "deeply mistaken".

Angry responses

The US move has angered many of its trading partners, and the EU has already filed a formal complaint at the WTO, although that could take months to resolve.

The US claimed its move was prompted by "unfair" government support for steelmakers in other countries, and is supported by WTO rules.

Pascal Lamy: EU will fight back

Leaders of EU nations over the weekend signed a declaration supporting the complaint to the WTO, and moves towards "possible safeguard measures".

"The European Council has taken note with great concern of the safeguard measures introduced by the US in the steel sector which are not in conformity with WTO rules," the declaration said.

EU steelmakers say they stand to lose $2bn a year to the US tariffs.

Some steel producing countries in developing countries, including South Africa, have negotiated broad exemptions from the US tariffs, while Canada, Mexico, Israel and Jordan are exempt under free-trade deals.

But steel producers in China, Brazil, Japan, South Korea, Norway, New Zealand, and Russia are expected to be hard hit by the US tariffs.

Last week the OECD, the rich countries' think-tank, said that steel producers needed to cut more than 100 million tonnes of capacity worldwide to restore the industry to profitability.

The trade war comes just a few months after world leaders pledged to co-operate in launching a new trade round at a meeting in Doha, in the Gulf Arab state of Qatar.