US, EU extend trade truce

On Dec. 19, the European Union and the U.S. agreed to extend their trade truce for aluminum and steel products as they continue negotiations on a Global Arrangement on Sustainable Steel and Aluminum (GSA).

The EU has extended the suspension of its rebalancing tariffs on U.S. products in the context of the steel and aluminum dispute until March 31, 2025. The EU rebalancing tariffs on U.S. exports were in response to the U.S. Section 232 tariffs on steel and aluminum that were implemented during the Trump presidency.

The U.S. agreed to provide for further exclusions from these tariffs for EU exporters, as well.

U.S. Trade Representative Katherine Tai released a statement that reads: “For the past two years, the United States and European Union have been engaged in critically important negotiations. Our goal is to forge a forward-looking arrangement that will allow us to join forces economically to incentivize fair and clean production and trade in the steel and aluminum sectors.

“These are technically complex negotiations, and the United States remains committed to our partnership with the EU and to staying at the table to continue the progress we have made so far.

“I am glad the EU has announced that it is taking steps to join us in extending the time for these negotiations and will follow our recommendation by continuing to suspend its tariffs on U.S. products.”

Tai adds, “The spirit of cooperation and partnership forged between President Biden and President von der Leyen is embodied in our efforts to address our shared global challenges. These initiatives include our work to create new trade paradigms that will drive a race to the top and promote resilience, sustainability and opportunity for workers and industries on both sides of the Atlantic.”

The EU says it will continue to engage constructively with the U.S. to preserve its legal rights and remove US 232 tariffs on EU exports for good. Work between the EU and the U.S. continues on addressing global overcapacity and decarbonization of the steel and aluminum sectors in the context of discussions on a GSA, with the EU noting that the mutual prolongation of tariff suspensions provides the necessary time and policy space to find agreement on the remaining GSA issues.

In 2018, the U.S. introduced tariffs on 6.4 billion euros ($7.3 billion) of European steel and aluminum exports. In response, the EU introduced rebalancing tariffs on U.S. exports to the EU valuing 2.8 billion euros ($3.1 billion). In 2022, the EU suspended these measures until Dec. 31 of this year to provide time to work together on a longer-term solution through the GSA. The U.S. replaced its Section 232 tariffs with a tariff-based quota system based on historical trade volumes, resulting in above-quota EU steel and aluminum still being subject to tariffs.

In 2022, the EU exported 3.8 million metric tons of steel to the U.S. Of those exports, 1.7 million metric tons were duty-free under the US 232 tariff rate quotas (TRQs), according to the European Commission. In addition, according to data the U.S. shared with the EU, the country granted 1.5 million metric tons of further exclusions to EU exporters.

Regarding aluminum, in 2022 the EU exported 289,000 metric tons to the U.S. However, only 146,000 metric tons of EU exports benefitted from the duty-free treatment under the US 232 TRQs, according to the European Commission. In addition, according to the data shared by the US administration with the European Commission, the U.S. granted 70,000 metric tons of exclusions to EU exporters.