The Trump administration has until midnight to decide if exemptions for the recently imposed tariffs on steel (25%) and aluminium (10%) will be extended. The exempted countries are all EU countries plus Australia, Argentina, Brazil, Canada, Mexico and South Korea. Many around the world have been waiting anxiously for this decision but, unfortunately, there is still no word forthcoming from Washington with 10 hours to go before the exemptions expire.
We are hoping for the best but all need to prepare for the worst. If the exemptions are not extended the EU has announced plans to retaliate if the U.S. does not act OR if their efforts to get satisfaction from the World Trade Agreement (WTO) do not produce results. The U.S. has argued that WTO has no authority in this matter because the tariffs were imposed for essential national security interests.
It has been reported that if the EU does not get satisfaction it will introduce tariffs on $3.5 billion of U.S. goods 90 days after the U.S. levies took effect. These EU tariffs would reportedly be targeted at "iconic American goods" including bourbon and Harley Davidson motorcycles. Not coincidentally these are products produced in the home states of the U.S. Speaker of the House and the Senate Majority Leader.
If exemptions are not extended exporters may want to consider shipping as soon as possible before EU tariffs take effect. Importers with products subject to the steel and aluminum tariffs may want to consider use of bonded warehouses or Foreign Trade Zones for shipments arriving after today in the hope that some more favorable settlement could be negotiated in the short term that would help avoid the new tariffs. There is no indication this is in the offing at this point but options are limited.
Against this backdrop we all sit and wait - and wonder if the above scenario would only be the beginning of an escalating trade war which could impact many other products and services. In search of some good news we will continue to monitor this situation closely and keep all advised.