The European Commission announced on Tuesday that it would keep tariffs on US steel and aluminium until March 2025 in order to reach an agreement on green steel and aluminium, according to Euractiv.
The EU originally imposed the fees as a reaction to tariffs imposed under the Trump presidency, prior to the Commission and the Biden administration agreeing to suspend the tariffs for two years in October 2021. The two-year pause was an opportunity to reach agreements on a common path to transition to a greener steel and aluminium industry and combating global overproduction.
At the same time, subsidising Chinese steel was seen as a threat to the US and European steel industries, which are of strategic importance, including the defence industry.
However, no agreement could be reached. The US administration favoured exempting its steel producers from the EU’s carbon border adjustment levy (CBAM) as well as wanted the EU to impose a common external tariff on foreign steel manufacturers.
The Commission found this unacceptable as they argued that the US proposal violated WTO principles. Instead, they would have preferred that the US adopt something similar to the EU’s CBAM.
The disagreement meant that the two-year reprieve would expire and reciprocal Trump-imposed tariffs would be back in place when the Biden administration would struggle to come to an agreement with the EU.
Biden could face Trump in the 2024 presidential election if the latter was allowed to run. Trump is ahead of the incumbent president in public support, according to the latest polls. The Republican Party nominee is also likely to maintain his isolationist stance on trade policy if elected.
Moreover, the US steel industry is concentrated in key swing states, making this an important issue for the electorate. Meanwhile, the Commission remains silent, although the deadline for an extension to March 2025 coincides with the time when a new or renewed current US administration is likely to be established.
Commission Executive Vice-President Valdis Dombrovskis stated that the decision provided the EU and the US “with the necessary space to continue pursuing the full and permanent removal of 232 tariffs on EU exports, as well as working on addressing global overcapacity and decarbonisation of steel and aluminium industries.”
We are committed to ensuring that transatlantic trade in steel and aluminium is undistorted and that our exporters are treated fairly.
The United States plans to extend the suspension of its tariffs to a quota based on historical trade volumes. Reacting to the decision via the online platform X, Bernd Lange, chairman of the European Parliament’s trade committee, called it “not a perfect solution, but a pragmatic one.”
“By extending the deadline, we have made an advance payment and played our part. Now it’s the American side’s turn.”
Lange also called for the reopening of the EU’s case against the US at the WTO, which he called “not an escalation but only a logical way of proceeding.” However, the US is currently blocking the WTO Appellate Body and openly ignoring the WTO dispute settlement mechanism.
