The USA and the European Union (EU) have reached an agreement over steel (and aluminium) tariffs, which will remove charges on more than US$10 billion of exports annually.
Agreement between negotiators was reached yesterday (Saturday 30 October) in Rome, where the G20 summit was taking place. A deal between the US and EU had been expected, according to a news report from Bloomberg. The aim was to reach agreement before 1 December 2021 when the EU was planning to double retaliatory tariffs.
As it now stands, while the Section 232 tariffs, introduced in 2018 by former President Donald Trump, are still in place, they only apply to exports beyond 3.3Mt.
Both parties regard the agreement as the end result of a successful negotiation and are now moving forward on US Commerce Secretary Gina Raimondo described as 'our shared challenge', none other than global excess capacity 'mainly by China'.
The deal is not so good for the UK steel industry, which has effectively been left out in the cold and at a competitive disadvantage with its European counterparts.
News of the US/EU agreement has been welcomed by the USA's leading steel trade bodies.
Philip K Bell, president of the Steel Manufacturers Association, commented: “Today, the United States announced an agreement with the European Union that replaces the 232 national security tariffs on EU steel imports with a tariff-rate quota (TRQ) system. We appreciate the hard work of Commerce Secretary Raimondo, United States Trade Representative Tai and their teams. We applaud their outreach to industry stakeholders throughout this process. The US and EU negotiators were committed to meeting the November 1st deadline. Doing so has increased the prospects for future cooperation between the two allies,” said Philip K. Bell, president of the Steel Manufacturers Association (SMA).
“The deal sets the stage for both trading partners to work collaboratively on solving critical issues such as global excess steel capacity, diversion of unfairly traded steel imports from China through the EU and reduction of greenhouse gas emissions. We also believe that with the additional EU volumes not subject to quota, there is a renewed need for the Administration to narrow the exclusion process substantially. Many exclusions will not be needed as new investments by the US industry come on line.”
“While the success of this agreement will hinge upon its successful implementation and enforcement, it is our belief that it will ultimately be measured by its impact on American workers and the transformational investments being made by domestic steel producers.” added Bell.
Kevin Dempsey, president and CEO of the American Iron and Steel Institute (AISI) commented: “We thank Secretary Raimondo and Ambassador Tai for their efforts to ensure that, as the United States works to develop a renewed partnership with the EU to address global steel excess capacity, a tariff-rate quota (TRQ) will be maintained under Section 232 to prevent another steel import surge that would undermine our industry and destroy good paying American jobs.
“We appreciate the Biden administration’s continued recognition that the American steel industry is critical to our national and economic security, as well as its commitment to addressing the global steel overcapacity crisis and to combatting unfair trade practices in the global steel sector. Proper implementation and enforcement of the TRQ will be crucial to ensuring that the new measures are effective in meeting these critical objectives.
“We hope that with the conclusion of this agreement, the United States and the EU will now work on a common action plan for challenging non-market industrial policies and other government interventions that fuel overcapacity in steel. We urge the US and EU to take active steps to hold China and other countries that employ trade-distorting policies to account. We also believe U.S.-EU cooperation should focus on new trade approaches to address climate change, including through development of effective carbon border adjustment measures.”
Bloomberg described the deal between the US and EU as 'a significant moment in repairing US trade relationships with Europe' after what it describes as Donald Trump's 'disruptive presidency'.