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United States, European Union end Trump-era tariff war over steel and aluminium

US Commerce Secretary Gina Raimondo told reporters that the deal will maintain US "Section 232" tariffs of 25 percent on steel and 10 percent aluminium, while allowing "limited volumes" of EU-produced metals into the US duty free

October 31, 2021 / 11:16 AM IST
File image of US President Joe Biden and former President Donald Trump (Image: AP)

File image of US President Joe Biden and former President Donald Trump (Image: AP)

The United States and European Union have agreed to end a festering dispute over US steel and aluminium tariffs imposed by former President Donald Trump in 2018, removing an irritant in transatlantic relations and averting a spike in EU retaliatory tariffs, US officials said on October 30.

US Commerce Secretary Gina Raimondo told reporters that the deal will maintain US "Section 232" tariffs of 25 percent on steel and 10 percent aluminium, while allowing "limited volumes" of EU-produced metals into the US duty free.

It also ends one of the biggest areas of friction between the allies and allows them to focus on negotiating new global trade agreements to address global excess steel and aluminium capacity mainly centred in China and reduce the industries' carbon emissions.

US officials did not specify the volume of duty-free steel to be allowed into the United States under a tariff-rate quota system agreed upon with the EU. Sources familiar with the deal, speaking on condition of anonymity, have told Reuters that annual volumes above 3.3 million tons would be subject to tariffs.

The deal grants an additional two years of duty-free access above the quota for EU steel products that won Commerce Department exclusions in the past year, officials said.

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The deal requires EU steel and aluminium to be entirely produced in the bloc - a standard known as "melted and poured" - to qualify for duty-free status. The provision is aimed at preventing metals from China and non-EU countries from being minimally processed in Europe before export to the United States.

"The agreement ultimately to negotiate a carbon-based arrangement on steel and aluminium trade addresses both Chinese overproduction and carbon intensity in the steel and aluminium sector," White House National Security Adviser Jake Sullivan told reporters. "It shows that we can solve the climate crisis while at the same time better protecting our workers - that we don't have to pick between climate or the economy."

President Joe Biden has sought to mend fences with European allies following Trump's presidency to more broadly confront China's state-driven economic practices that led to Beijing building massive excess steelmaking capacity that has flooded global markets.

Raimondo said the deal will reduce costs for steel-consuming US 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.

Europe exported around 5 million tons of steel annually to the United States prior to Trump's imposition of the "Section 232" tariffs in March 2018 on national security grounds.

The deal also eliminates Europe's retaliatory tariffs against US products including whiskey and Harley-Davidson motorcycles that were set to double on December 1, the US officials said.

The US allows imports of steel and aluminium duty free from North American trade deal partners Mexico and Canada, with a mechanism that allows tariffs to be reimposed in the event of an unexpected "surge" in import volumes.



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