In extremis, the EU and the US agreed on Sunday 31 October to prevent escalation of the Section 232 tariff dispute on steel and aluminium. They had given themselves until the end of October to find a solution. After that, the EU was expected to impose the top tier of its tariffs on certain US imports on 1 December.
Ultimately, Washington agreed to lift part of the tariffs imposed by Donald Trump in 2018 (25% on steel and 10% on aluminium). European exports will be exempt from Section 232 tariffs to the tune of US$6.7 billion (US$5.5 billion for steel and US$1.2 billion for aluminium). This suspension will be implemented on 1 January 2022.
According to the Commission, this tariff quota corresponds to the historical trade volume between the EU and the US and will avoid up to €1.5 billion in tariffs.
“These discussions were far from easy, and this solution is not perfect. But it means we can move on from one of the most visible irritants imposed by President Trump”, said EU Trade Commissioner Valdis Dombrovskis.
The EU recalled in a statement that it “continues to consider these duties incompatible with World Trade Organization rules”.
However, it agreed to suspend the tariffs it had imposed on certain US products in response to the Section 232 tariffs (see EUROPE 12720/14).
The two partners also commit to working towards a comprehensive agreement on sustainable steel and aluminium within 2 years. They also want to invite partners with shared values to join the agreement.
Reactions. European business representatives, such as Business Europe and SpiritsEurope, welcomed the announcement. The European steel association Eurofer welcomed the willingness to reach a global agreement on sustainable steel. It also welcomed the partial pause in steel and aluminium tariffs, while cautioning on the details: “It is important for EU steel producers exporting to the US that the new provisions, introducing a Tariff Rate Quota (TRQ) system, take into account traditional EU export levels within a stable framework, and that the product exemptions for EU steelmakers already in place are maintained or renewed”, said its Director General, Axel Eggert.
The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) also welcomed the transatlantic announcement. “The agreement will ensure US domestic industries remain competitive while committing the United States and European Union to work together to address the root of the problem: Chinese state subsidies and global overcapacity in the steel and aluminium sectors”, said AFL-CIO President Liz Shuler.
She has been joined on this point by many companies such as Harley Davidson and the representative of spirits producers Brown-Forman, which benefit from the suspension of European tariffs.
On the other hand, the representative of the European aluminium sector expressed his disappointment with the solution found around tariff quotas. “The quota system will only create a two-tier price system and additional unpredictability. Metal traders will use this to their advantage to manipulate aluminium prices”, lamented Gerd Götz, Managing Director of European Aluminium. Moreover, he said, the historical volumes used for quotas do not take into account the growing demand for aluminium.
In the European Parliament, the chairman of the Committee on International Trade, Bernd Lange (S&D, Germany), also welcomed the arrangement. “While the Section 232 tariffs will not be fully eliminated, the partial removal of the tariffs is an important step in de-escalation and shows that this administration is committed to working with us”, he said.
WTO. The EU and the US have also agreed to put their WTO dispute on hold.
See the joint EU-US statement: https://bit.ly/3nWVraW (Original version in French by Léa Marchal)