- ‘US would need to provide compelling evidence that the imports of steel and aluminum pose a direct threat to its national security, which may be challenging to substantiate in a trade dispute context,’ says former WTO official

- Tit-for-tat measures could escalate into a broader trade conflict, disrupting international trade relations and exacerbating economic inequalities, warns Luanga

GENEVA

Under President Donald Trump’s second term, concerns are mounting over the looming reimposition of US tariffs on European steel and aluminum – a move that threatens to reignite trade tensions reminiscent of his first presidency.

The latest round of tariffs – set to take effect on March 12 – reflects a broader shift in Washington’s trade policy, as the US seeks to eliminate existing exemptions and quotas on steel and aluminum imports. Under the new measures, tariffs on steel will remain at 25%, while those for aluminum will increase from 10% to 25%.

The US has justified this decision by citing a significant rise in steel imports from the EU and UK, which accounted for 20.7% of total US steel imports in 2024 – an increase from 18.6% in 2020.

However, European leaders view the move as a protectionist measure designed to shield US manufacturers at the expense of global trade stability.

The ongoing dispute is rooted in a long-standing conflict between the two economic powers. In 2018, when the Trump administration first imposed similar tariffs, the EU formally challenged the decision at the World Trade Organization (WTO), arguing that the tariffs violated international trade agreements, including the General Agreement on Tariffs and Trade (GATT) 1994 and the Agreement on Safeguards.

Several countries, including Japan, China, Canada, and Norway, later joined in, highlighting widespread global concerns over Washington’s protectionist policies.

Despite these legal challenges, the US defended its actions by invoking Section 232 of the Trade Expansion Act, which permits tariffs on national security grounds.

Faustin Luanga, a veteran economist who worked for the WTO Secretariat for 29 years, believes that Washington’s justification for the tariffs could face strong opposition under WTO rules and spark retaliation from the EU.

“The argument for tariffs based on national security under Section 232 is contentious within the WTO framework. While countries have some leeway to protect national security interests, the WTO typically requires that such measures be necessary and proportionate,” Luanga told Anadolu.

“The US would need to provide compelling evidence that the imports of steel and aluminum pose a direct threat to its national security, which may be challenging to substantiate in a trade dispute context.”

If Washington fails to justify the tariffs convincingly, Luanga warned that the EU is “likely to respond with its own tariffs on US goods, targeting sectors that could create political pressure in the US.”

“This tit-for-tat approach could escalate into a broader trade conflict, potentially affecting other sectors and leading to a cycle of retaliation that disrupts international trade relations,” he said.

US-EU dispute could ‘exacerbate economic inequalities’

Back in 2018, the EU’s countermeasures targeted politically sensitive American exports such as whiskey, motorcycles, jeans, and agricultural products. Another round of retaliatory tariffs could further strain international trade flows, particularly if other affected countries follow suit.

Beyond the political ramifications, the imposition of tariffs could have significant consequences for global steel and aluminum markets.

Luanga warns that higher tariffs would likely raise prices, driving up costs for industries reliant on these metals, such as the automotive and construction sectors.

He also highlighted the potential impact on developing economies, which depend on stable trade flows.

“The implementation of tariffs could lead to increased prices for steel and aluminum globally, affecting supply chains and production costs,” he said.

“Developing economies that rely on exports of these metals may face reduced demand, while those dependent on imports could experience higher costs. This could exacerbate economic inequalities and create challenges for economic growth in these regions.”

With the WTO’s dispute settlement system facing persistent challenges – largely due to the US blocking new Appellate Body judges – Luanga said there has been “a growing trend towards regional and bilateral trade agreements as a means of resolving trade disputes.”

“Countries may seek to form alliances to counteract the effects of tariffs, leading to new trade partnerships that could reshape global trade dynamics,” he said.

Need for WTO reforms

While Trump’s tariffs in his first term led to a series of legal battles, economic retaliations, and shifts in global trade dynamics, analysts fear his second round could be even more contentious as the US may use them as a bargaining tool to pressure the EU into making broader trade concessions.

However, Trump’s second term may also face greater resistance. Unlike in 2018, European leaders have had years to prepare for US protectionist policies and may adopt a more aggressive approach in countering tariffs.

To prevent the escalation of trade wars, Luanga suggests that the WTO must implement key reforms to enhance its ability to manage trade disputes.

These reforms, he said, could include “strengthening the dispute resolution mechanism, ensuring timely and fair adjudication of disputes, and enhancing transparency in trade practices.”

“Additionally, establishing clearer guidelines for the use of national security exceptions could help prevent misuse and promote a more stable trading environment,” he explained.

“Above all, countries must continue to communicate and express their trade concerns. The WTO does monitor various unilateral trade measures that may impede trade.”

Anadolu Agency website contains only a portion of the news stories offered to subscribers in the AA News Broadcasting System (HAS), and in summarized form. Please contact us for subscription options.