Europe angry at U.S. steel tariff

BRUSSELS, Belgium -- The European Union is threatening retaliation over tariffs imposed by the U.S. on steel imports.

President George W. Bush announced the tariffs of up to 30 percent late on Tuesday.

European Commission President Romano Prodi had warned Bush on Monday that Europe would be forced to react if Washington went ahead with the tariffs, commission spokesman Jonathan Faull said.

The EU and the U.S. have the world's biggest trade relationship and are the only two major steel import markets.

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Bush's move, due to come into effect on March 20 and last for three years, is to help the struggling U.S. steel industry, but imports from some countries including Canada and Mexico are to be exempted.

"This relief will help steelworkers, communities that depend upon steel, and the steel industry adjust without harming our economy," said Bush.

But some American steel makers had pushed for a 40 percent tariff for four years to combat low prices and high labour costs.

Faull said before the announcement that Brussels would wait before reacting in detail.

"There is absolutely no doubt that any measures which restrict trade will have an impact on our relations with the United States," he told Reuters.

"It's in our interests, it's in the Americans' interests and it's in the interests of the world as a whole that EU-U.S. trade friction should be kept to a minimum. We are not seeking confrontation."

EU steel imports of 25.4 million tons from around the globe exceeded exports by only 2.25 million tons. By contrast, U.S. steel imports of 38 million tons exceeded exports by 31.4 million tons.

Germany, the EU's biggest steel producer, and Sweden say the EU should take Washington to the World Trade Organization. Britain has also expressed concern.

"The United States is imposing prohibitive tariffs, which under WTO rules is not allowed," an EU official told Reuters.

Russia warned that a tariff "could have a serious impact on the atmosphere of Russian-American relations."

The reaction from Asia was also strong, with Korean steel industry sources saying the tariff would affect 80 percent of all U.S. steel imports.

Japan, which exported 2.2 million metric tons of steel to America last year and is facing a slump in demand for steel, gave its support for moves to take the U.S. to the WTO.