The United States has decided to impose tariffs on the import of all steel and aluminium products from all countries except Canada and Mexico on the basis of national security. WTO trade rules, and in particular GATT Article XXI allows WTO Members to disregard most other GATT rules when an issue of national security arises. The rules do not provide an easy mechanism to allow other Members to second guess actions taken on those grounds.

The EU has to address two issues: i) the likely surge in exports to the EU caused by the blocking of the US market to large exporters like Brazil, Turkey and others, this is known as the deflections of trade problem; and ii) whether or not to take retaliatory action against the US for blocking EU steel and aluminium exports to the US.

The EU is on much safer legal ground in taking safeguards to protect the EU market against import surges due to deflections of trade. It is not clear that the EU has the right to take retaliatory actions. In an attempt to make retaliation legal the EU is choosing to classify the US measures not as national security measures but as safeguard measures. GATT Article XIX allows WTO Members to take retaliatory action.

The EU has drawn up a list of US products on which it will impose prohibitive tariffs. These include Harley Davidson motorbikes from Wisconsin, where House leader Paul Ryan comes from, Levi jeans, thanks to which Nancy Pelosi has her Congressional seat (the jeans no longer come from California but that’s where the profits go to) and Bourbon Whiskey from Kentucky where Mitch McConnell, the Senate majority leader is based.

What is certain is that these developments will have an impact on shipping patterns and port usage.