The United States and the European Union have agreed to resolve a protracted trade dispute over US tariffs on steel and aluminum. This was announced today by US Secretary of Commerce Gina Raimond. The agreement also abolishes retaliatory EU tariffs on American products. The dispute was launched in 2018 by then-US President Donald Trump, who introduced tariffs on imports of steel and aluminum from the EU and a number of other countries.
EU Trade Commissioner Valdis Dombrovskis has confirmed on twitter that the EU and the US have agreed to suspend the trade dispute and start working on a future global agreement on sustainable steel and aluminum production. According to Dombrovskis, the agreement will be formally announced by US President Joe Biden and European Commission President Ursula von der Leyen on Sunday.
Raimond said the agreement maintained US tariffs on steel and aluminum imposed by Trump under section 232 of the Trade Expansion Act of 1962. At the same time, it would allow a limited number of EU products to enter the United States and help the two economies face a common problem of global overcapacity. supplies mainly from China.
US officials have not specified how much steel can be imported into the US from the EU duty free. Reuters, citing its sources, said the agreement would allow EU countries to export 3.3 million tonnes of duty-free steel to the United States each year under a system of tariff quotas. Higher import volumes will be subject to customs duties, but certain steel products that received exemptions from US tariffs last year could be imported duty free in excess of quotas. Including exemptions, imports of 4.3 million tonnes of steel would be exempt from duty next year. Prior to the introduction of tariffs, the EU exported around five million tonnes of steel to the United States each year.
The agreement requires that steel and aluminum be produced exclusively in the EU in order to be eligible for duty-free status. The aim of the provision known as the “smelting and casting” standard is to prevent metals from China and non-EU countries that are minimally processed in the EU from being exported to the US.
Technically, the agreement leaves in force US tariffs on steel 25 percent and on aluminum ten percent introduced for reasons of national security. In practice, however, it exempts a substantial part of European imports from customs duties.
Trump has introduced tariffs on imports of steel and aluminum from the EU and a number of other countries. He justified the widely criticized measure by saying that the import of these products threatens the American economy and thus national security. The EU responded by imposing retaliatory duties on selected US goods, such as Harley-Davidson motorcycles and Levi Strauss jeans. These tariffs were supposed to double from December 1 this year, but the agreement cancels them.
The United States allows duty-free imports of steel and aluminum from its North American trading partners, Mexico and Canada. However, they have a mechanism in place that allows customs duties to be reintroduced in the event of an unexpected surge in imports.