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Thursday, December 02, 2021

EU welcomes pause in tariff tiff with US as step in right direction

Former US President Donald Trump imposed tariffs of 25% on steel and 10% on aluminium from the European Union in 2018.

By: Reuters | Brussels |
October 31, 2021 9:15:11 pm
US President Joe Biden and European Commission's President Ursula von der Leyen shake hands after speaking about steel and aluminium tariffs, on the sidelines of the G20 leaders' summit. (Reuters)

The European Commission on Sunday welcomed a deal struck with the United States to allow greater imports of EU steel and aluminium as a step in the right direction, but not a final resolution to their dispute.

US President Joe Biden and European Commission chief Ursula von der Leyen announced the agreement on Sunday on the sidelines of the G20 summit in Rome, although US officials had given certain details of the accord on Saturday.

Former US President Donald Trump imposed tariffs of 25% on steel and 10% on aluminium from the European Union in 2018, along with other economies such as China, India, Russia and Switzerland.

Biden has sought to mend fences with EU allies after Trump’s “America First” presidency to more broadly confront China’s state-driven economic practices that led to massive excess production capacity in steel that has flooded global markets.

Under the new agreement, to run for two years, the Trump-era tariffs will remain but only for imports of the metals exceeding set quotas.

European Commission Vice President Valdis Dombrovskis, who oversees trade for the 27-nation bloc, described the deal as a pause rather than an end to the dispute.

“It’s a major step in the right direction… but it’s really not the final destination, which should be complete withdrawal of the tariffs,” he told a media briefing.

The deal should also bring to an end EU retaliatory tariffs on products ranging from US bourbon to Harley Davidson motorbikes. The EU had planned to double many of the tariffs in December.

In addition, the EU has suspended, though not ended, its legal challenge against the United States at the World Trade Organization.

The transatlantic partners will spend the next two years working on a deal to address overcapacity, above all for steel and mainly centred on Chinese production, and efforts to make those industries more environmentally sustainable. Other “like-minded” partners would also be invited to join.

The quota limits will be 3.3 million tonnes of steel annually, plus a further 1.1 million tonnes already granted as exclusions to the tariffs. The overall quota would be equivalent to exports in the 2015-2017 period, before tariffs were imports.

For European aluminium, some 18,000 tonnes of primary metal and 366,000 tonnes of semi-finished product would be allowed in tariff-free by the United States.

EU officials said this was more in line with the 2018-2019 flows, which actually increased despite the introduction of tariffs. The Commission says that despite tariffs, data showed the United States still needed EU aluminium and that domestic price hikes induced by tariffs were simply paid for by users.

U.S. steel imports from the EU have fallen by around 50% since Trump imposed the tariffs.

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