European Union Launches WTO Challenge to U.S. Tariffs

BRUSSELS—The European Union fired its first shot Friday against U.S. steel and aluminum tariffs, launching a World Trade Organization challenge and vowing swift duties on American exports, in a sign that the bloc would go blow-for-blow with President Donald Trump over trade.

Brussels says Washington’s measures are “pure” protectionism. With its WTO complaint, it is challenging the U.S. national-security justification for Mr. Trump’s levies, in an unusual rift between the trans-Atlantic allies.

“The U.S. is playing a dangerous game here,” European Trade Commissioner Cecilia Malmström said Friday. For Europe, “Not responding will be the same as accepting these tariffs, which we consider illegal under WTO rules.”

The White House didn’t immediately respond to a request for comment.

An EU-U.S. trade war risks undermining joint efforts to counter China.

Highlighting Europe’s desire to compartmentalize differences with the U.S. and engage Washington in challenging Beijing’s state-backed capitalism, the EU on Friday also filed a WTO case against China for undermining intellectual-property rights with forced technology transfers.

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At stake in Europe’s fight with the U.S. is the future of the international order forged by the allies after World War II, with the goal of slashing trade barriers and opening markets to bolster free enterprise world-wide. Now, Mr. Trump’s “America First” policies are undermining that system and efforts to combat causes of global trade imbalances, driven by Chinese overcapacity, subsidies, and Beijing’s other trade practices, EU officials say.

“If players in the world do not stick to the rule book, the system might collapse—and that is why we are challenging today both the U.S. and China at the WTO,” Ms. Malmstrom said. “We are not choosing any sides, we stand for the multilateral system.”

Chinese Foreign Minister Wang Yi said Friday in Brussels after meeting his EU counterpart, Federica Mogherini, that Beijing is committed to rules-based, multilateral trade. He expressed hope for a “mutually beneficial outcome” in the continuing Beijing-Washington negotiations, as Mr. Trump oscillates between threatening massive tariffs and striking a bargain to close the U.S. trade deficit with China.

“China’s position is not only trying to uphold China’s own interests, but also upholding international rules and the global free-trade system,” Mr. Wang said, echoing the European position against U.S. moves.

The EU complaints against the bloc’s top two trading partners also come on the heels of an agreement among the EU, Japan and the U.S. this week, when the three outlined a joint road map to reform WTO rules on industrial subsidies.

Meeting on the sidelines of an Organization for Economic Cooperation and Development gathering in Paris for the third time since launching their trilateral effort in December, Ms. Malmstrom, Japan’s trade chief Hiroshige Seko and U.S. Trade Representative Robert Lighthizer targeted commercial practices they often attribute to China, without identifying any country.

“There is a general convergence among the three partners on the need to better address market-distorting behavior of public bodies and [state-owned enterprises]. Such entities are the backbone and the distinctive feature of certain state-driven economic systems,” the trade officials said Thursday in a joint statement.

Even as Brussels signals its willingness to cooperate with the U.S., however, the path forward in mending bilateral relations remains unclear. U.S. Commerce Secretary Wilbur Ross suggested Thursday that Washington and Brussels could hammer out a trade deal despite the tariffs, whose removal was an EU precondition for discussions.

“We are not going to enter into any negotiations,” Ms. Malmström said. “That door, for the moment, is closed.”

The European Commission—the EU’s executive arm—has prepared a list of U.S. exports that could be slapped with €6.4 billion ($7.5 billion) worth of levies, €2.8 billion of which could go into effect June 20.

EU governments will discuss their course of action one final time with the commission before Brussels acts, according to European officials familiar with the deliberations.

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Meanwhile, an investigation into vehicle and auto-part imports Mr. Trump ordered last month is stoking uncertainties and threatening to escalate the EU-U.S. trade spat.

The president had repeatedly warned that if the EU counters his steel and aluminum tariffs, he would hit back with levies on European car exports. His latest probe, also on national-security grounds, could open a path for retaliation.

“We will see where that goes,” Ms. Malmström said. “Should that happen, that is extremely worrying.”

European leaders have rejected White House suggestions that steel and aluminum exports from the 28 EU countries—22 of which are North Atlantic Treaty Organization members—pose security threats to the U.S. Invoking the same claim for car imports “would be even more far-fetched,” the EU said.

“The U.S., EU and U.K. are close allies and have always promoted values of open and fair trade,” British Prime Minister Theresa May said Friday, adding that U.K. steel- and aluminum-makers contribute to U.S. defense projects that bolster American security. “The EU and U.K. should be permanently exempted from tariffs and we will continue to work together to protect and safeguard our workers and industries.”

—Laurence Norman and Jenny Gross contributed to this article.

Write to Emre Peker at emre.peker@wsj.com

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