U.S. Threatens European Steel Embargo

WASHINGTON —  U.S. Trade Representative Clayton Yeutter has raised the threat of an embargo on steel shipments from America’s closest allies in Western Europe if they fail to set new limits on their exports to the United States by the end of the week.

Such a drastic step probably would touch off a cycle of retaliatory trade restrictions on both sides and sour U.S. relations with its European allies.

The Administration is turning up the heat in the steel talks, which have been going on here and in Brussels for six weeks, because it sees a cutback in European imports as critical to the success of its attempt to give the beleaguered steel industry time to become internationally competitive.

While other steel suppliers--including Canada and Japan--have cut back their shipments in response to Reagan’s call for voluntary restraints 13 months ago, the European producers have increased their sales to the United States by 17% in the first eight months of this year.

The U.S. stance is being watched closely by Congress, other domestic industries and American steelmakers as a litmus test of Reagan’s aggressive new policy to reduce record trade deficits.

While Yeutter declined to specify what retaliatory action he would take against the 10-nation European Economic Community if no agreement is reached by today, he raised the possibility of an immediate embargo.

Some progress was reported Wednesday in Brussels, but it appeared unlikely that an agreement would be reached by the deadline.