This post has been updated.
Germany's foreign minister on Friday morning said the Trump administration is taking a “dangerous step” after the Commerce Department announced a tariff on imports of foreign steel, indicating the tax could become a new source of conflict with the powerful U.S. ally and trading partner.
The strongly worded statement from German Foreign Minister Sigmar Gabriel further intensified trade tensions between the United States and international officials since President Trump took office. Although Trump's actions on trade so far have been modest and have in many respects preserved the status quo, the president and his advisers have hinted at more disruptive measures in the future, and Gabriel claimed that the administration was abandoning established international principles of free trade.
“The U.S. Government is apparently prepared to provide American companies with unfair competitive advantages over European and other producers, even if such action violates international trade law,” Gabriel's statement read. “I very much fail to comprehend the decision.”
Gabriel is objecting to the Trump administration's conclusions following an investigation into the pricing of certain types of steel plate from Germany, as well as from Austria, Belgium, France, Italy, Japan, Korea and Taiwan. The Commerce Department's findings, announced Thursday, allow the administration to begin collecting tariffs ahead of a final determination expected in May.
The steel investigation relates to a pair of executive actions on trade that Trump signed Friday afternoon, ordering a review of U.S. trade policy.
"During the campaign, I traveled the nation and visited the cities and towns devastated by unfair trade policies -- probably one of the major reasons I’m here today, trade," the president said. "Nobody’s ever made bad trade deals like our country has made."
Those actions will instruct the administration to identify areas in which foreign countries' policies may be putting U.S. producers at a disadvantage and contributing to the U.S. trade deficit. The deficit is the amount by which U.S. imports of goods and services exceed U.S. exports. Few economists regard the trade deficit as harmful in itself, but Trump has said that reducing it will be a major priority of his administration.
A second action orders a review of duties imposed by the United States on foreign goods in retaliation for unfair practices — such as those the administration alleged in the international market for steel plate.
Among the countries affected by the new duty, Germany and France export the most steel plate to the United States — about $196 million and $179 million respectively in 2015, according to the department. Those figures are small in the context of international trade. The trade deficit last year was just over $502 billion, according to the federal Bureau of Economic Analysis.
Yet Gary Hufbauer, an expert at the Peterson Institute for International Economics, said the forceful German response could indicate that the Trump administration is “pushing the envelope.”
Gabriel, the foreign minister, claimed that the duties had not been calculated in accordance with international agreements on trade. He called on the European Union to formally complain about the duties to the World Trade Organization.
Whether the investigation indicates Trump's direction for trade policy, or merely a continuation of a probe initiated under President Barack Obama, is still unclear, Hufbauer said.
“You have to think about it this way: We are in a trade war,” Commerce Secretary Wilbur Ross said on CNBC's “Squawk Box” on Friday. “We have been for decades.”