EU Commission postpones reintroduction of steel tariffs until after US election

The European Commission will keep tariffs on US steel and aluminium suspended until March 2025 to reach a deal on green steel and aluminium until then, according to an announcement on Tuesday (19 December).

The EU had initially imposed the tariffs as a reaction to Trump-era tariffs on EU steel and aluminium before the Commission and the Biden administration agreed on a tariff suspension for two years in October 2021.

The two-year suspension was meant to provide time to forge an agreement on a common way to transition towards a greener steel and aluminium industry and combat global overproduction.

Chinese steel subsidisation was seen as a danger to US and European steel industries, strategically crucial for the defence industry, among other sectors.

However, the two transatlantic partners could not agree on the arrangement.

The US administration advocated for an exemption of its steel manufacturers from the EU’s carbon border levy (CBAM), and it also wanted the EU and the US to impose a common external tariff for foreign steel producers.

The Commission, however, deemed this unacceptable as it argued that the US proposal would violate WTO principles. Instead, it would have preferred to have the US adopt something similar to the EU’s CBAM.

The transatlantic disagreement meant that the two-year period that the EU and US gave themselves would run out, and the mutual tariffs from the Trump era would jump back in place when it would be difficult for the Biden administration to be lenient with the EU.

In 2024, Biden will probably have to fight a reelection campaign against Donald Trump, who has a good standing in the polls and is likely to embrace his isolationist positioning on trade policy.

Moreover, the US steel industry is concentrated in key US swing states, making it an important constituency.

In its official communication, meanwhile, the Commission stays silent on this line of reasoning even though the timing of the extension until March 2025 matches the time when a new (or renewed) US administration would probably be in place.

In a statement, the Commission’s Executive Vice-President Valdis Dombrovskis said 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.”

In turn, the US would also extend the suspension of its tariffs up to a quota based on historical trade volumes. However, the US has yet to implement this formally.

Reacting to the decision via the online platform X, the chair of the European Parliament’s trade committee, Bernd Lange, 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,” he said.

Lange also called for a resumption of the EU’s WTO case against the US, which he called “not an escalation but only a logical way of proceeding.”

It is unclear how much this would help the EU’s case, given that the US is currently blocking the WTO’s Appellate Body and openly ignoring the WTO’s dispute settlement mechanism.

[Edited by Alice Taylor]

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