EU says US trade talks move in right direction, but metals tariffs not helping

Trade talks between the European Union and the United States are going in the right direction, Europe's top trade negotiator said on Wednesday, while criticising a doubling of U.S. metals tariffs as a move that did not help with the negotiations.

The new tariffs on steel and aluminium imports kicked in on Wednesday, the same day President Donald Trump's administration wants trading partners to make "best offers" to avoid other punishing import levies from taking effect in early July.

Meanwhile, alarmed European businesses urged the 27-nation EU to do everything it can to remove the tariffs, as the bloc's trade negotiator Maros Sefcovic met with U.S. Trade Representative Jamieson Greer in Paris early on Wednesday.

"We both concluded that we are advancing in the right direction, at pace," Sefcovic told reporters after meeting Greer. Technical meetings are ongoing in Washington, he said, and high-level contacts will follow.

"What makes me optimistic is I see the progress ... the discussions are now very concrete," Sefcovic said, stressing that he and Greer had agreed to restructure the focus of their trade talks, "approaching it from different angles."

There was no comment yet from the U.S. side.

Late on Tuesday, Trump signed an executive proclamation that activates from Wednesday a hike in the tariffs on imported steel and aluminium to 50% from the 25% rate introduced in March. 

The increase came into effect at 12:01 a.m. (0401 GMT). It applies to all trading partners except Britain, the only country so far to strike a preliminary trade agreement with the U.S. during a 90-day pause on a wider array of Trump tariffs.

The increase in the levies jolted the market for both metals this week, especially for aluminium, which has seen price premiums more than double this year. With little capacity to increase domestic production, U.S. import volumes are likely to be unaffected unless the price increases undercut demand.

Sefcovic said he deeply regretted the doubling of the steel tariffs, stressing that the EU has the same challenge - overcapacity - as the United States on steel, and that they should work together on that.

'BEST OFFER' DUE DATE

Wednesday is also when the White House expects trading partners to propose deals that might help them avoid Trump's hefty "reciprocal" tariffs on imports across the board from taking effect in five weeks.

U.S. officials have been in talks with several countries since Trump announced a pause on those tariffs on April 9, but so far only the UK deal has materialised and even that pact is essentially a preliminary framework for more talks.

Also on Wednesday, British Prime Minister Keir Starmer said that he was confident U.S. tariffs on UK steel would be reduced to zero within a "couple of weeks."

Reuters reported on Monday that Washington was asking countries to list their best proposals in such key areas as suggested tariffs and quotas for U.S. products and plans to remedy any non-tariff barriers. 

In turn, the letter promises answers "within days" with an indication of a "landing zone," including what tariff rates countries can expect after the 90-day pause ends on July 8. 

At issue for most trading partners is whether they retain the current baseline rate of 10% on most exports to the U.S. after that date, or something possibly much higher.

A person familiar with the negotiations said the EU did not receive that letter.

HAVOC FOR BUSINESSES

Uncertainty around U.S. trade policy is creating havoc for businesses around the world.

On Wednesday, French spirits group Remy Cointreau abandoned its 2030 sales growth ambitions, saying tariffs, slow U.S. sales and high uncertainty could derail its plans for this financial year and beyond.

Austrian speciality steelmaker Voestalpine also warned that tariffs were likely to dent its earnings.

"U.S. producers will try to find suppliers that are not affected by the tariffs. If they find one, the German supplier is probably out," said German steel and metal processing association WSM, which represents around 5,000 companies.

"Nobody has the margins to absorb these bottomless tariffs," said WSM Managing Director Christian Vietmeyer, adding: "The EU must therefore do everything it can to resolve this customs conflict."

CLOSEST PARTNERS

The United States imports about a quarter of all its steel, and Census Bureau data shows the increased tariffs will hit the closest U.S. trading partners - Canada and Mexico - especially hard. 

Canada will be even more exposed to the aluminium levies since it exports to the U.S. roughly twice as much as the rest of the top 10 exporters' volumes combined. The U.S. gets about half of its aluminium from foreign sources.

Prime Minister Mark Carney's office said Canada was "engaged in intensive and live negotiations to have these and other tariffs removed." 

Mexico's Economy Minister Marcelo Ebrard reiterated that the tariffs were unsustainable and unfair, especially given that Mexico imports more steel from the U.S. than it ships there.

Separately, alarm over China's hold on the critical minerals market is growing as global automakers joined U.S. counterparts to complain that its restrictions on exports of rare earth alloys, mixtures and magnets could cause production delays.