US agrees to roll back tariffs on European steel and aluminium

WASHINGTON • The Biden administration said it has reached a deal to roll back tariffs on European steel and aluminium, an agreement that officials said would lower costs on goods such as cars and washing machines, reduce carbon emissions, and help get supply chains moving again.

The deal, which comes as US President Joe Biden and other world leaders meet at the Group of 20 summit in Rome, is aimed at easing trans-Atlantic trade tensions that worsened under former president Donald Trump, whose administration initially imposed the tariffs.

Mr Biden has made it clear he wants to repair relations with the European Union, but the agreement also appears carefully devised to avoid alienating US labour unions and manufacturers that have supported him.

It leaves some protections in place for the American steel and aluminium industry, by transforming the current 25 per cent tariff on European steel and 10 per cent tariff on aluminium into a so-called tariff-rate quota, an arrangement in which higher levels of imports are met with higher duties.

The agreement will put an end to retaliatory tariffs that the EU had imposed on American products, including orange juice, bourbon and motorcycles. It will also avert additional tariffs on American products that were set to go into effect on Dec 1.

"We fully expect this agreement will provide relief in the supply chain and drive down cost increases as we lift the 25 per cent tariffs and increase volume," US Commerce Secretary Gina Raimondo said on Saturday.

Ms Raimondo, in a briefing with reporters, said the deal had allowed the United States and EU to establish a framework to take carbon intensity into account when producing steel and aluminium, which could allow them to manufacture cleaner products than those produced in China.

"China's lack of environmental standards is part of what drives down its costs, but it's also a major contributor to climate change," Ms Raimondo said.

The tariffs were imposed on dozens of countries, including those in the EU, after the Trump administration determined that foreign metals posed a national security threat.

Mr Biden vowed to work more closely with Europe, which he has described as a partner in efforts to combat climate change and compete against economies such as China. But he has been under pressure from American metal manufacturers and labour unions not to entirely remove the trade barriers, which have helped protect the domestic industry from a glut of cheap foreign metal.

The deal marks the final step for the Biden administration in dismantling Mr Trump's trans-Atlantic trade war.

In June, US and European officials announced an end to a 17-year dispute over aircraft subsidies given to Airbus and Boeing.

In late September, the US and Europe announced a new partnership for trade and technology, and last month they came to an agreement on global minimum taxes.

Under the new terms, the EU will be allowed to ship 3.3 million tonnes of steel annually into the US duty-free, while any volume above that would be subject to a 25 per cent tariff, according to people familiar with the arrangement.

Products that were granted exclusions from the tariffs this year would also temporarily be exempt.

The agreement will also place restrictions on products that are finished in Europe but use steel from China, Russia, South Korea and other countries.

To qualify for duty-free treatment, steel products must be entirely made in the EU.

Mr Jake Sullivan, Mr Biden's national security adviser, said the deal removed "one of the biggest bilateral irritants in the US-EU relationship".

Metal unions in the US praised the deal, which they said would limit European exports to historically low levels.

The US imported 4.8 million tonnes of European steel in 2018, a level that fell to 3.9 million in 2019 and 2.5 million last year.

In a statement, Mr Thomas Conway, president of the United Steelworkers International, said the arrangement would "ensure US domestic industries remain competitive and able to meet our security and infrastructure needs".

Mr Mark Duffy, chief executive of the American Primary Aluminium Association, said the deal would maintain the effectiveness of Mr Trump's tariffs, "while allowing us to support continued investment in the US primary aluminium industry and create more American aluminium jobs".

He added that the arrangement would support the US aluminium industry by limiting duty-free imports to historically low levels.

Other countries remain subject to US tariffs or quotas, including Britain, Japan and South Korea.

The US Chamber of Commerce, which has opposed the metal tariffs, said the deal did not go far enough.

Mr Myron Brilliant, executive vice-president of the chamber, said the agreement would offer "some relief for American manufacturers suffering from soaring steel prices and shortages, but further action is needed".

He added: "The US should drop the unfounded charge that metal imports from Britain, Japan, South Korea and other close allies represent a threat to our national security - and drop the tariffs and quotas as well."

NYTIMES