U.S. President Joe Biden has announced a two-year extension of the suspension of tariffs on European Union (EU) steel and aluminum.
This move is aimed at facilitating ongoing negotiations between the United States and the EU to tackle issues related to overcapacity in steel production and promote low-carbon manufacturing.
Initially implemented in January 2022, the United States had suspended import tariffs of 25% on EU steel and 10% on EU aluminum, replacing the previous tariffs imposed during the tenure of former President Donald Trump.
This replacement involved the introduction of a tariff rate quota (TRQ) system.
In response to the U.S. tariffs, the EU had imposed retaliatory tariffs covering a wide range of American products, including Harley Davidson motorcycles, bourbon whiskey, and power boats.
These EU retaliatory tariffs, which were set to expire, have also been extended until 2025, coinciding with upcoming elections on both sides of the Atlantic.
The primary objective of the negotiations between the United States and the European Union has been to address the problem of excess metal production capacity, particularly in non-market economies like China.
Additionally, the discussions aim to promote the production of environmentally friendly, greener steel. Originally slated for resolution by 2023, the negotiations had hit a roadblock.
President Biden, in a presidential proclamation, acknowledged the “substantial progress” made in the discussions and expressed his commitment to continuing them.
The TRQ system allows for the import of up to 3.3 million metric tons of EU steel and 384,000 tons of aluminum into the United States without tariffs, based on historical trade levels. Beyond these limits, tariffs will be imposed.
This extended exemption is applicable until December 31, 2025.
It’s noteworthy that President Biden has chosen to maintain the existing tariff rates for non-EU countries, indicating a desire to balance trade policy while working towards resolving steel and aluminum-related issues with the EU.
The extension of the tariff suspension reflects a commitment to fostering a productive dialogue between the two economic powers and finding sustainable solutions to global trade challenges.