Paul Krugman’s most recent NYT column reminded me of an incident that I’d largely forgotten about which seems relevant to the current debate about both the Port Talbot steel plant and the EU referendum. Here’s the Guardian from 2003 reporting that:
The US today stepped back from a trade war with the EU and Japan as George Bush lifted punitive tariffs on steel imports.
Mr Bush made his decision just days before a deadline that would have triggered retaliation from the EU, which was preparing to impose sanctions worth $2.2bn (£1.3bn) on US goods ranging from Florida citrus products to Harley Davidson motorbikes.
“These safeguard measures have now achieved their purpose, and as a result of changed economic circumstances, it is time to lift them,” Mr Bush said in a statement.
The measures were designed to inflict maximum political pain on Mr Bush, with the EU targeting products from states that would play a crucial role in next year’s presidential election. The World Trade Organisation last month ruled the US tariffs illegal and said the EU had the right to retaliate.
There are many areas where the EU punches below its weight but trade is not one of them. It is a field where all member states do co-ordinate properly and that creates the world’s largest trade bloc. There’s a power that comes with being the biggest kid on the bloc and discarding that would be a risky move indeed.