Breaking: EU and U.S. Forge Path to 2025 with Extended Tariff Suspension on Steel and Aluminium
In a momentous turn of events in the realm of global commerce, the European Union and the United States have solidified a groundbreaking agreement to prolong the suspension of tariffs on EU steel and aluminium until March 2025. This landmark extension, endorsed by the European Commission, signals a continued period of de-escalation in the trade discord that has persisted since 2018.
Amid this 15-month extension, the United States commits to sustaining the suspension of tariffs, initially instituted at 25% for EU steel and 10% for EU aluminium during the tenure of former President Donald Trump in 2018. The extension strategically defers the resolution of the dispute, pushing it beyond the imminent U.S. and EU elections.
Responding to U.S. tariffs, the EU had previously imposed retaliatory measures on a spectrum of U.S. products, spanning from Harley Davidson motorcycles to bourbon whiskey and power boats. Notably, these retaliations will remain dormant under the current accord.
Shifting from the era of tariffs, Washington replaced its tariff framework with a quota system in January 2022, initially slated for a two-year period. This innovative system facilitates the entry of up to 3.3 million metric tons of EU steel and 384,000 metric tons of aluminium into the U.S. market without incurring tariffs. Negotiations addressing the challenge of overcapacity in the steel industry, anticipated to conclude by the close of 2023, encountered a setback leading to a U.S.-EU summit in October. Subsequently, the United States proposed extending the tariff suspension to provide a more extensive timeframe for discussions, focusing on establishing a system to counter overcapacity and promote eco-friendly steel production.
Eurofer, the European steel association, embraces the extension as a positive stride, envisioning it as a catalyst for renewed negotiations. Simultaneously, the U.S. Distilled Spirits Council expresses gratitude for the extension, preventing the potential re-imposition and doubling of EU tariffs to 50% in the upcoming year. The council strongly advocates for a lasting resolution to this protracted trade dispute.
Despite the adoption of the quota system, the European Commission raises concerns about its inflexibility. Over the past year, EU steel encountered around US$264 million in U.S. tariffs, while the EU had dismantled its retaliatory tariffs. This incongruity becomes a focal point in the ongoing trade dialogues, underscoring the intricacies of the transatlantic trade relationship.