WASHINGTON/ROME — The United States and European Union have agreed to end a dispute over U.S. steel and aluminum tariffs imposed by former President Donald Trump in 2018, removing an irritant in transatlantic relations and averting a spike in E.U. U.S. officials stated that they would not impose retaliatory tariffs on Saturday.
Commerce Secretary Gina Raimondo told reporters that the deal will maintain U.S. “Section 232” tariffs of 25% on steel and 10% aluminum, while allowing “limited volumes” of E.U.-produced metals into the United States duty free.
It eliminates a source of friction between the allies and lets them focus on negotiating a new global trade agreement to address worldwide excess steel and aluminum capacity mainly centered in China and reduce carbon emissions from the industries.
E.U. Valdis Dombrovskis, trade chief, confirmed the agreement. He wrote on Twitter “We have agreed with U.S.A to pause” the dispute over trade and begin cooperation on a future international arrangement on sustainable steel or aluminum. Dombrovskis stated that the deal would be officially announced by Biden, European Commission President Ursula von der Leyen, on Sunday U.S. Officials did not provide details about the amount of duty-free steel that would be allowed into the United States under the tariff-rate system that was agreed upon with E.U The deal gives an additional two-years of duty-free entry above the E.U. quota. U.S. officials stated that steel products that were exempted by Commerce Department in the last year have been granted additional two years of duty-free access.
The agreement requires E.U. To qualify for duty-free status, steel and aluminum must be produced entirely in the bloc. This is known as “melted poured”. This provision is intended to prevent metals from China or other non-E.U. countries. The provision prevents metals from China and other non-E.U. countries from being minimally processed in Europe prior to export to the United States.
Europe exported around 5 million tons of steel annually to the United States prior to Trump’s imposition of the tariffs on national security grounds.
” The agreement to negotiate a carbon based arrangement on aluminum and steel trade addresses both Chinese production and carbon intensity in steel and aluminum sectors,” White House National Security Adviser Jake Sullivan said to reporters. He also stated that workers and the environment can be protected .
U.S. The U.S. is known for its steel production which heavily relies on electric-arc furnaces. This makes it far less carbon-intensive than the blast furnaces that are powered by coal in China.
Biden sought to repair relations with European allies after Trump’s presidency in order to confront China’s state-driven economy practices, which led to Beijing building large excess steelmaking capacities that have flooded global markets. The deal will end Europe’s retaliatory tariffs on U.S. products, including bourbon whiskey and Harley-Davidson motorcycles. It also eliminates motor boats, which were due to double Dec. 1. Officials from the United States said. The end of this long-running tariff nightmare is within sight for U.S. distillers, who have struggled to cope with the weight of tariffs and the pandemic,” Chris Swonger, President of Distilled Spirits Council, said. He also called on Britain to lower its tariff on American whiskeys.
Record steel prices
Raimondo said the deal will reduce costs for steel-consuming U.S. manufacturers. Steel prices have more than tripled in the past year to records topping $1,900 a ton as the industry has struggled to keep up with a demand surge after COVID-19 pandemic-related shutdowns, contributing to inflation.
U.S. The quotas will allow primary aluminum producers to continue investing in domestic capacity, which was reduced to just two companies before Trump imposed tariffs.
American Iron and Steel Institute President Kevin Dempsey stated that the quota arrangement will “prevent another surge in steel imports that would undermine our industry and threaten good-paying American jobs.” “
” We urge the U.S.A. and E.U. Dempsey said that the U.S. and E.U. should take proactive steps to hold China, as well as other countries using trade-distorting strategies to account. We also believe that the U.S. and E.U. are a good partnership. “We also believe that the U.S.-E.U. should cooperate on new trade strategies to address climate change. This includes developing effective carbon border adjustment methods. “
Due to its exit from the E.U., Britain’s steel exports remain subject to the tariffs, as are those of other U.S. allies including Japan. The U.S. Chamber of Commerce opposed the metals tariffs right from the beginning and said that duties and quotas should not be imposed on “close allies”. “