Politics

EU ambassador says retaliatory tariffs against the US should take effect in the next few weeks

Key Points
  • David O'Sullivan, the EU's ambassador to the U.S., says the EU will take a case to the World Trade Organization to "challenge the legitimacy" of the U.S. tariffs.
  • He says the Trump administration's plans to impose tariffs are "a step in the wrong direction" for world trade.
  • "We don't believe that European exports of steel and aluminum pose any threat to U.S. national security or even to United States economic interest," he says.
VIDEO4:2104:21
EU ambassador: This looks more like a trade skirmish than a trade war

David O'Sullivan, European Union ambassador to the U.S., told CNBC that the United States can expect retaliatory tariffs by the end of June.

"Similar to Canada, we will both take a case to the [World Trade Organization] to challenge the legitimacy of these tariffs and we will also exercise our rights under the WTO to apply rebalancing tariffs to an equivalent volume of U.S. exports," O'Sullivan said Thursday on "Power Lunch."

"We've already made the necessary procedural steps at the WTO, and I would expect that this would be taken forward in the next few weeks," he said. "So probably by the end of June we should see tariffs taking effect."

In March, President Donald Trump announced steel and aluminum tariffs as a way to alleviate what he called unfair trading practices.

On Thursday, Commerce Secretary Wilbur Ross said the Trump administration will place those tariffs on steel and aluminum imports from Canada, Mexico and the European Union effective at midnight Thursday. The levy will be 25 percent on steel imports and 10 percent on aluminum imports. The U.S. had given those allies a reprieve from the duties, but the exemptions were set to expire Friday.

The tariffs immediately drew sharp criticism from around the world, and the U.S. allies planned targeted retaliation. European Commission President Jean-Claude Juncker said the EU will introduce countermeasures. Canada announced retaliatory tariffs on steel and aluminum, and Mexico also said it would impose tariffs in response.

After Ross made the announcement Thursday, the European Commission tweeted: "The EU believes these unilateral U.S. tariffs are unjustified and at odds with World Trade Organization rules. This is protectionism, pure and simple."

O'Sullivan said the current tensions aren't a trade war yet but "a step in the wrong direction."

"We deeply regret the decision of the United States," he said. "We don't think these tariffs are justified. We don't believe that European exports of steel and aluminum pose any threat to U.S. national security, or even to United States economic interest."

"We are very disappointed," O'Sullivan said, adding it's "a bad day for world trade."

O'Sullivan said the EU has offered to discuss trade issues with the United States. But, he said, "We can only do that in an atmosphere of trust and confidence, and the imposition of these tariffs by the United States damages that mood."

"Both the United States and the EU are each other's most important trading partners," O'Sullivan said. "And we both do well economically out of that trade. And anything that seeks to reduce or diminish the importance of that trade will ultimately damage our respective economies."

The ambassador said the point of the EU tariffs is to "send a clear message that actions have consequences."

"Imposing unfairly these illegal tariffs, the United States has to understand that this will then have consequences for their exporters also," he said.

Mexican Ambassador to the U.S. Geronimo Gutierrez told CNBC that Mexico has also "been forced" to take equivalent actions, establishing tariffs on a series of products.

While there is no definitive list yet, potential imports would include steel products, pork, cheeses and cranberries.

"It's exactly dollar-to-dollar," Gutierrez said Thursday on "Closing Bell." "It's an equivalent measure on the damage that will be caused by the decision-making by the United States."

He said Mexico, the U.S.' third-largest trading partner in 2017, has had "good conversations" with the Trump administration in the last year and would like to continue NAFTA negotiations but only on a "level playing field."