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EU, US move to end steel row and look to China, Europe News & Top Stories

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BRUSSELS (AFP) – The European Union and United States took a step towards a post-Trump trade truce on Monday (May 17), agreeing to hold talks to end a tit-for-tat feud over steel and aluminium tariffs.

In a carefully phrased statement, US Trade Representative Katherine Tai and her EU counterpart Valdis Dombrovskis announced “discussions to address global steel and aluminium excess capacity” that would tackle China’s outsize role in the problem.

The Europeans will, in addition, temporarily suspend a plan to increase tariffs on the US, the EU said.

The peace offering is the latest chapter in a row that began in June 2018 when then US president Donald Trump imposed US tariffs of 25 per cent on steel and 10 per cent on aluminium from Europe, Asia and elsewhere.

Brussels responded with counter-tariffs on €2.8 billion (S$4.5 billion) worth of iconic US products, including bourbon whiskey, jeans, orange juice and Harley-Davidson motorbikes.

The EU was planning to increase those counter-tariffs on June 1 but, given the easing of tensions with the Biden administration, will now refrain from doing so.

In return, both sides have agreed to talk about the overproduction of steel, which has helped depress prices with output – mainly from China – flooding the global market and putting steel plants in difficulty.

This would be a fresh attempt to pressure Beijing after years of on-and-off international talks to address China’s steel overproduction delivered no result.

‘China to account’

While never addressing the Trump tariffs specifically, the statement said both sides “agreed to avoid changes on these issues that negatively affect bilateral trade”.

Singling out China, the statement said that “the United States and EU member states are allies and partners, sharing similar national security interests as democratic, market economies”.

This alignment, it added, means the EU and US “can partner to promote high standards, address shared concerns, and hold countries like China that support trade-distorting policies to account”.

The Europeans had hoped that the US would commit further to the truce and had offered to suspend all metals-related tariffs for six months as they pursued a longer term solution.

The tariffs however have proved politically popular in steel producing states in the US midwest and the Biden administration has for now decided to keep the protections in place.

German MEP Bernd Lange, who heads European Parliament’s trade committee, said Europe must remain vigilant on Washington’s reluctance to end the tariffs and pointed to a meeting between President Joe Biden and the EU chiefs next month in Brussels.

Mr Lange said the EU’s “gesture needs to be reciprocated by the US with a tangible commitment during the EU-US summit”.

“If not, rebalancing tariffs,” he warned, in reference to the tariff hike that was temporarily suspended by the EU.

In an earlier sign of detente, both sides in March suspended punitive tariffs in the separate, two-decade long dispute over aircraft manufacturers Airbus and Boeing.

Yet another fight – this one over digital taxes slapped on US big tech by France, Spain and other EU nations – has also mellowed, with US tariffs suspended and all sides pursuing a global solution at the Organisation for Economic Co-operation and Development.



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