Washington, EU end trade war over US steel, aluminium tariffs

The United States and the European Union have agreed to end a festering dispute over US steel and aluminum tariffs imposed by former US President Donald Trump in 2018, removing an irritant in transatlantic relations and averting a spike in EU retaliatory tariffs.

US Commerce Secretary Gina Raimondo said the deal will maintain US "Section 232" tariffs of 25 percent on steel and 10 percent on aluminum, while allowing "limited volumes" of EU-produced metals duty free.

It eliminates a source of friction between the allies and lets them focus on negotiating a new global trade agreement to address worldwide excess steel and aluminum capacity mainly centered in China and reduce carbon emissions from the industries.

EU trade chief Valdis Dombrovskis confirmed the deal, writing on Twitter that "we have agreed with US to pause" the dispute and launch cooperation on a future global arrangement on sustainable steel and aluminum.

US officials did not specify the volume of duty-free steel to be allowed into the United States under a tariff-rate quota system agreed upon with the EU. Sources familiar with the deal, speaking on condition of anonymity, have said annual volumes above 3.3 million tons would be subject to tariffs.

The deal grants an additional two years of duty-free access above the quota for EU steel products that won Commerce Department exclusions in the past year, US officials said.

The agreement requires EU steel and aluminum to be entirely produced in the bloc – a standard known as "melted and poured" – to qualify for duty-free status.

The provision is aimed at preventing metals from China and non-EU countries from being minimally processed in Europe before export to the United States.

Europe exported around 5 million tons of steel annually to the United States before Trump's imposition of the tariffs on national security grounds.

"The agreement ultimately to negotiate a carbon-based arrangement on steel and aluminum trade addresses both Chinese over-production and carbon intensity in the steel and aluminum sector," White House National Security Adviser Jake Sullivan told reporters, adding that the climate and workers can be protected at the same time.

US steel production, which relies heavily on electric-arc furnaces, is regarded as having far lower carbon emissions than the coal-fueled blast furnaces prevalent in China.

Biden has sought to mend fences with European allies following Trump's presidency to more broadly confront China's state-driven economic practices that led to Beijing building massive excess steelmaking capacity that has flooded global markets. The deal will eliminate Europe's retaliatory tariffs against US products including bourbon.