The European Union and the United States have agreed to shelve their ongoing dispute over tariffs on steel and aluminium, thus avoiding steep EU tariff rises and beginning formal talks on ways of dealing with the problem of global overcapacity which is mostly centred in China.
Photo: Balkan Photos / Flickr
The European Commission said it had suspended the threatened June 1 retaliatory doubling of tariffs on Harley-Davidson motorbikes, motorboats and US whiskey for up to six months, as well as refraining from imposing additional tariffs on further US-made products ranging from sports shoes to lipstick.
However, the US will continue with its 25% tariff on steel and 10% tariff on aluminium, despite this latest development. The tariffs also apply to imports from a number of other metal-exporting countries including China, Russia, India, Turkey and Japan.
Read more: Harley-Davidson's upbeat forecast soured by EU tariffs ruling
A joint statement released by Brussels and Washington said that as long-running allies and market-based economies, they were able to promote high standards and address mutual concerns, as well as "hold countries like China that support trade-distorting policies to account."
The ongoing discussions are aimed at finding solutions to the issue of worldwide steel and aluminium overcapacity before the end of 2021, although Reuters reported a Commission official as saying that a resolution to the tariffs dispute could emerge sooner.
A month before US President Joe Biden is scheduled to visit Brussels for a summit - aimed at easing transatlantic tensions after the tumultuous Trump years - one EU diplomat pointed out the "terrible optics" that a rise in tariffs on US products would create.
The head of the trade committee of the European Parliament, Bernd Lange, said that the US must come to its summit with the EU with "tangible" commitments to reciprocation of the Commission's gesture. If that transpires not to be the case, extra tariffs would then be justified, he added.
Valdis Dombrovskis
Valdis Dombrovskis served as Prime Minister in his native Latvia between 2009 until 2014. He has held the position of Executive Vice President of the European Commission for An Economy that Works for People since 2019 and European Commissioner for Trade since 2020.
Valdis Dombrovskis, executive vice-president at the European Commission said the EU's decision to suspend the tariffs rise was a demonstration that the bloc was taking steps to "reboot the transatlantic relationship".
The tariffs on imports of metals were imposed by former US President Donald Trump's administration, which cited national security as the reason. European steelmakers such as ThyssenKrupp and Voestalpine have said these measures have harmed them.
Read more: EU Makes Case Against Trump's Metal Tariffs At WTO
Brussels has strongly denied that its exports pose a national security threat and retaliated by slapping tariffs on €2.8 billion worth of US goods including orange juice, whiskey and motorcycles, which will also remain in place.
The detente in tariffs has been hailed as a step in the right direction by Harley-Davidson, European Aluminium and the US Distilled Spirits Council.
The American Iron and Steel Institute said it hoped for substantive solutions from the talks and added that China was not the only cause of the overcapacity problem and that surges in imports came from every region.
Some in the US steel industry have argued that governments in Europe must pledge to end the use of state investments and subsidies to prop up domestic steelmaking.
"We cannot support any approaches that do not provide measurable positive results" to strengthen US employment, the United Steelworkers union said in a statement. "The EU is an important ally, but in the past, it has been part of the problem, not part of the solution."
Read more: EU & US to suspend tariffs in long-running Airbus-Boeing feud
The EU has been urging the US for a suspension of its metals tariffs for the last six months, akin to the four-month suspension agreement the two sides reached in March over the long-running aircraft subsidies dispute.
The European Commission says that US tariffs have affected as much as €6.4 billion of EU metal exports and that the remaining €3.6 billion would be rebalanced after three years, or following a ruling in its favour by the World Trade Organization, where it is challenging the US tariffs.
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