Ending the dispute over steel and aluminum tariffs?
Sources: US and EU will announce agreement
The United States and the European Union have agreed to end the simmering dispute over the steel and aluminum tariffs imposed by former US President Donald Trump in 2018, removing a nuisance in transatlantic relations and a surge in EU To prevent retaliatory tariffs, US officials announced on Saturday.
Trade Secretary Gina Raimondo told reporters that the deal will maintain US Section 232 tariffs "25% on steel and 10% on aluminum, while introducing limited amounts" of EU-made metals into the United States duty-free may be.
This will remove a source of friction between the allies, and allow them to focus on negotiating a new global trade deal to eliminate the world's steel and aluminum overcapacity, mainly located in China, and to reduce industry's carbon emissions.
EU trade chief Valdis Dombrovskis confirmed the deal and wrote on Twitter (NYSE: TWTR) that "we have agreed with the US to suspend the trade dispute" and to start working together on a future global agreement on sustainable steel and aluminum. Dombrovskis said that Biden and European Commission President Ursula von der Leyen will formally announce the agreement on Sunday.
US officials did not provide any information on the amount of duty-free steel to be imported into the United States under a tariff quota system agreed with the EU. Sources familiar with the deal said, on condition of anonymity, that annual quantities over 3.3 million tons would be subject to tariffs.
The agreement provides that EU steel products, for which the Ministry of Commerce issued exemptions last year, can be imported duty-free beyond the quota for a further two years.
The agreement stipulates that EU steel and aluminum must be manufactured entirely in the EU - a standard known as "melted and poured" - in order to qualify for duty-free status. This provision is intended to prevent metals from China and non-EU countries from undergoing minimal processing in Europe before being exported to the United States.
Before Trump introduced the tariffs for national security reasons, Europe exported around 5 million tons of steel to the United States annually.
"The agreement, which will ultimately lead to negotiations on a carbon-based deal for the steel and aluminum trade, affects both Chinese overproduction and carbon intensity in the steel and aluminum sectors," White House national security adviser Jake Sullivan told reporters and added 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 be far lower in carbon than the coal-fired blast furnaces prevalent in China.
After Trump's presidency, Biden has sought rapprochement with European allies to more broadly combat China's state-directed economic practices that have resulted in Beijing building massive excess steelmaking capacity that has flooded world markets.
The deal removes European retaliatory tariffs on US products like bourbon whiskey, Harley-Davidson (NYSE: HOG) motorcycles and motorboats, which should double on December 1, according to US officials.
"The end of this long tariff nightmare is in sight for US distillers struggling with the weight of the tariffs and the pandemic," said Chris Swonger, president of the Distilled Spirits Council, calling on the UK to lift its tariffs Pick up American whiskeys.
RECORD PRICES FOR STEEL
Raimondo said the deal will cut costs for US steel-consuming producers. Steel prices more than tripled in the past year, hitting record highs of over $ 1,900 per ton as the industry struggled with a surge in demand following the COVID-19 pandemic-induced production shutdown, which contributed to inflation.
U.S. producers of primary aluminum, 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 very low and well below pre-volume levels Tariffs are, according to Mark Duffy, CEO of the American Primary Aluminum Association.
Kevin Dempsey, president of the American Iron and Steel Institute, said the quota regime will help "prevent another wave of 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 with trade-distorting policies accountable," said Dempsey. "We also believe that US-EU cooperation should focus on new trade approaches to tackle climate change, including through developing effective measures to adjust carbon limits.
Due to the UK's 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 for "close allies" should be dropped.