U.S., E.U. to end tariff war over steel, aluminum

WASHINGTON / ROME – The United States and the European Union have agreed to end a dispute over US steel and aluminum tariffs imposed in 2018 by former President Donald Trump to remove a stimulus in transatlantic relations and an increase in the Avoid EU retaliatory tariffs, US officials said on Saturday.

Trade Secretary Gina Raimondo told reporters that the deal would keep US Section 232 tariffs of 25% on steel and 10% aluminum, while bringing in “limited amounts” of EU-made metals into the United States duty-free.

It removes a source of friction between the allies and allows them to focus on negotiating a new global trade deal to address global overcapacity in steel and aluminum, especially in China, and to reduce industry’s carbon emissions.

EU trade chief Valdis Dombrovskis confirmed the deal. write on twitter that “we have agreed with the US to pause the trade dispute” and to work together on a future global agreement on sustainable steel and aluminum. Dombrovskis said the deal would be officially announced on Sunday by Biden and EU Commission President Ursula von der Leyen.

US officials did not provide any information on how much duty-free steel can be imported into the United States under a tariff quota agreed with the EU.

The deal grants an additional two years of duty-free access over the quota on EU steel products that were banned by the Commerce Department last year, US officials said.

The deal requires that EU steel and aluminum be produced entirely in block – a standard known as “melted and poured” – in order to achieve duty-free status. The purpose of the provision is to prevent metals from China and non-EU countries from being minimally processed in Europe before being exported to the USA.

Europe exported around 5 million tons of steel annually to the US before Trump imposed the tariffs for national security reasons.

“The agreement to eventually negotiate an agreement to trade carbon-based steel and aluminum targets both Chinese overproduction and carbon intensity in the steel and aluminum sectors,” White House National Security Advisor Jake Sullivan told reporters adding that the climate and workers can be protected at the same time.

US steel production, which relies heavily on electric arc furnaces, is considered to have far lower CO2 emissions than the coal-fired blast furnaces prevalent in China.

After Trump’s presidency, Biden has sought to mend fences with European allies to more fully confront China’s state-driven economic practices that have led Beijing to build massive overcapacity in steelmaking that has flooded global markets.

The deal will remove Europe’s retaliatory tariffs on US products like bourbon whiskey, Harley-Davidson motorcycles and motor boats, which should double on December 1, US officials said.

“The end of this long customs nightmare is in sight for US distillers grappling with the weight of the tariffs and the pandemic,” said Chris Swonger, president of the Distilled Spirits Council, and also called on the UK to lift its tariffs on American whiskeys .

Record prices for steel

Raimondo said the deal will cut costs for US steel-consuming manufacturers. Steel prices more than tripled in the past year to record highs of over $ 1,900 per ton as the industry struggled to keep pace with a surge in demand following the COVID-19 pandemic shutdowns, which contributed to inflation.

The US primary aluminum producers, which had shrunk to two companies by the time Trump imposed the tariffs, will be able to maintain their investments in revitalizing domestic capacity as quotas are set at very low levels, well below pre-tariff quantities, said Mark Duffy, CEO of the American Primary Aluminum Association industry group.

American Iron and Steel Institute President Kevin Dempsey said the quota regime will help “prevent any further surge in steel imports that would undermine our industry and destroy well-paying American jobs.”

“We call on the US and the EU to take active steps to hold China and other countries that employ trade-distorting policies accountable,” added Dempsey. “We also believe that US-EU cooperation should focus on new trade approaches to tackle climate change, including developing effective measures to adjust carbon limits.”

Due to the exit from the EU, UK steel exports remain subject to tariffs, as are those of other US allies, including Japan. The US Chamber of Commerce, which opposed metal tariffs from the start, said tariffs and quotas should be dropped by “close allies”.

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