EU set to retaliate on steel tariffs

The steel issue isn't the first time the U.S. and EU have used trading sanctions as political weapons

LONDON, England (CNN) -- The European Union is expected to impose tariffs on steel imports on Wednesday in response to a similar move by the United States earlier this month.

Brussels is set to play the United States at its own game, imposing tariffs of between 14.9 and 26 percent on steel imports. The United States imposed tariffs of up to 30 percent.

"It's sort of like two bullies in a playground arguing with one another, and in this particular instance it's the U.S. who has sort of instigated their situation. And the EU is basically saying, 'Oh, they started it,'" says Steve Orava of Baker & Mackenzie.

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"Now the thing to remember though, is that if both (World Trade Organisation) members in this case apply their safeguards in accordance with WTO rules, then they are allowed to do so."

Anglo-Dutch steel producer Corus is satisfied with the expected adoption of tariffs by the EU, saying it is "delighted with the pace with which the commission is reacting."

The EU tariffs do not stop at steel. Brussels has drawn up a list of other U.S. goods worth about $2 billion.

Harley-Davidson motorbikes are thought to be on the list, as well as orange juice from Florida -- a key political state for U.S. President George W. Bush. Textiles are also expected to be included.

But experts say these additional retaliatory measures may not materialise.

"The EU hope that the mere threat of penalising the exporters .... that just threatening that will be enough to cause these companies to start lobbying Washington and say, 'For goodness sake, get rid of these silly steel measures, cause it's going to do us a lot of damage,'" says Guy de Jonquieres of the Financial Times.

This is certainly not the first time the trading blocs have used trading sanctions as political weapons.

The United States and European Union have been battling for years over tariffs on bananas from former French and UK colonies in the Caribbean. The United States won that battle.

The WTO ruled against the EU over banning imports of U.S. hormone-treated beef.

And EU complaints of unfair provisions for U.S. groups which they say are in effect illegal subsidies are still rumbling on.

But steel could become the biggest trade war of all.

"This is much more serious, whereas (with) bananas or beef a consumer can simply choose to avoid them, you have no choice with steel. It's a bit like oil in that respect. It can lead the economy down," says Matthew Parry of the Economist Intelligence Unit.

The EU has until May to decide if it wants to go ahead with the additional retaliatory measures.