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Thursday, May 23, 2024

First shots fired in Trump’s trade war

Norway’s foreign minister is worried, shares in Norwegian aluminum producer Norsk Hydro slumped heading into the weekend, and NATO allies are feeling both insulted and angry. When exemptions from US President Donald Trump’s punitive customs duty on steel and aluminum imports expired on Friday, most all of the US’ allies including Norway were hit hard, with the EU now expected to strike back at the US with punitive tariffs of its own that worry Norwegian officials even more.

Norwegian Prime Minister Erna Solberg visited US President Donald Trump at the white house in January. Five months later, Norway is caught in Trump’s trade war and faces many disagreements with the Trump Administration. PHOTO: NRK screen grab

Trump claims his new high import duties are a matter of national security. Others claim they amount to “pure protectionism” and will greatly disrupt world trade. The US, notes the chief economist at Norway’s Sparebank1 Markets, “hasn’t found any reason to exempt its closest allies and trading partners.” That has angered the US’s allies in NATO.

While Canadian Prime Minister Justin Trudeau called Trump’s new fees both “insulting and unacceptable,” Norway is lobbying hard to win exemptions from any retaliatory fees the EU imposes. Most of Norway’s aluminum exports, including that produced by Norsk Hydro, go to the EU. If Norway is hit by the same high tariffs in the EU that it now already faces in the US, the fortunes of 40 Norwegian companies will be badly affected, along with the jobs they create.

“We’re talking about NOK 2 billion a year in steel exports to the EU,” Knut Sunde, director of national employers’ organization NHO Norsk Industri, told newspaper Dagens Næringsliv (DN). “There are 40 companies that export for a billion Norwegian kroner or more.”

Norway has already failed to be exempted from Trump’s new fees on steel (25 percent) and aluminum (10 percent). That alone hasn’t hurt too badly, since Norway exports little steel or aluminum to the US. The partially state-owned metals producer Norsk Hydro, however, faces much higher costs at its US production facilities and at its plants in Qatar and Germany that now face the new import taxes. It would be all very bad for Hydro if it also has to suddenly pay export duties to the EU.

“I’m worried that the US is now further boosting protectionist measures in its trade policy,” Norwegian Foreign Minister Ine Eriksen Søreide told news bureau NTB. It’s the latest in a string of disagreements that Norway has had with the US since Trump took office.

Norway is in an extra difficult position since it’s not a member of the EU. The entire dispute is now seen as a major test of the trade agreement Norway has with the EU, and whether the WTO will agree that it can allow the EU to exempt Norway from its own punitive import taxes to be imposed against the US.

“We continue to follow this issue in all channels,” Søreide said. Norwegian diplomats are also lobbying hard with the EU to avoid Norway being further hurt by the EU’s own measures to protect the European market. The EU’s trade commissioner has warned that all countries would be hit by the same measures it imposes against the US, but she told newspaper Aftenposten that the situation may be different for Norway, Liechtenstein and Iceland, which all have direct access to the EU’s inner market through their collective trade deal with the EU.

Norway maintains that its agreement with the EU, known as the EEA/EØS pact, gives the EU legal means to exempt its three signatories. Others contend that may violate WTO standards, while French President Emmanuel Macon has declared that Trump’s own tariffs are illegal.

Now Trump is also considering punitive tariffs on car imports that also threatens Norway’s steel, aluminum and car parts exports. “If that happens,” says Norwegian economist Harald Magnus Andreassen, “there won’t just be the danger of a trade war. Then there really is a trade war.” Berglund



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