Europe\u2019s approach to trade will need to be more like Donald Trump\u2019s to protect an ailing steel industry from a flood of Chinese imports, according to the head of one of the region\u2019s top stainless steel makers.\u00a0 <\/p>\n
Only outright tariffs can counter the wave of cheap Asian supplies that a safeguard system under the World Trade Organization\u2019s free-trade rules has failed to contain, said Bernardo Velazquez, chief executive officer of Spain\u2019s Acerinox SA.\u00a0 <\/p>\n
\u201cIf we don\u2019t want to rely solely on imports and have our own supply of strategic raw materials, we need to consider imposing tariffs,\u201d Velazquez said in an interview in Madrid. \u201cI\u2019m not saying tariffs should be our \u2018favorite word\u2019 as Trump said, but we should stop having forbidden words in Europe.\u201d\u00a0 <\/p>\n
European steelmakers have been grappling in recent years with high energy costs and competition from Asian peers saddled with overcapacity. The trade wars triggered by the US president will likely only make things worse \u2014 not only due to less access to the American market but also because the EU will be targeted by Asian mills even more.\u00a0 <\/p>\n
\u201cThey will target the world\u2019s largest free market, which is Europe,\u201d said Velazquez. <\/p>\n
The EU\u2019s safeguard system sets country quotas for duty-free imports and imposes a 25% levy on shipments above that. Chinese mills have partly skirted the system by selling their steel to Europe through third countries.\u00a0 <\/p>\n
In the case of stainless steel, Indonesia is also a major producer that\u2019s been overwhelming the European market, Velazquez said. Other top producers of the material in Asia include India and Japan.\u00a0 <\/p>\n
The safeguard, first implemented in 2018, is due to expire in 2026 and can no longer be renewed, but could be replaced by another instrument.\u00a0 <\/p>\n
If nothing changes, European production \u201cwill remain in Europe, as there will be no other market to sell to\u201d and Asian manufacturers will also look to the region\u2019s market as they, too, will no longer be able to sell to the US, said Velazquez. <\/p>\n
On the bright side, Velazquez sees Germany\u2019s recently approved spending package as a potential driver for the industry, a view shared with other players who have called for tariffs to ensure they can back Europe\u2019s renewed defense and infrastructure push. <\/p>\n
Acerinox has a diversified business, with most of its earnings before items coming from the US. Its North American Stainless Inc. unit makes about half of that kind of steel in the continent.\u00a0 <\/p>\n
Still, the Madrid-based company\u2019s North American operations won\u2019t necessarily fully benefit from the tariffs imposed by Trump, said Velazquez.\u00a0 <\/p>\n
They\u2019re \u201ca political matter\u201d which is \u201ccreating a lot of uncertainty even for American companies. We don\u2019t know whether the countries from which we buy our equipments or raw material will be subject to some kind of restrictions\u201d and that has an impact on the business, he said.\u00a0 <\/p>\n
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