On Friday, Bloomberg reported that the EU is considering reopening a case at the World Trade Organization (WTO) which would protest the US is engaged in unfair trade practices with respect to its steel and aluminum tariffs, according to people familiar with the matter.
The conflict began in 2015 when then-President Donald Trump, citing national security concerns, imposed tariffs on European steel and aluminum. In response, the European Union responded with its own tariffs, which triggered uncertainty in the commodities markets which even spread to unrelated industries, according to Bloomberg. Over the course of the dispute, the allies levied tariffs against each other on a broad range of goods worth over $10 billion.
In 2021, the European Commission enacted a temporary truce with the Biden administration which would have lasted for two years, in the course of which the two parties would seek a deal on the so-called Global Arrangement on Sustainable Steel and Aluminum (GSA), which would have ended the tariffs. The temporary agreement put some of the tariffs on hold to help businesses which were struggling during the Covid-19 pandemic.
Washington partly removed the tariffs and set some tariff-rate quotas under the treaty, above which there would be duties applied to the metals, while the EU suspended all of its restrictions. The US-imposed mechanism was made up of dozens of quarterly quotas applied to various categories of goods.
Citing sources with knowledge of the matter, Bloomberg reported, “That has created an unbalanced situation, according to the EU, that has seen the bloc’s exporters pay over $350 million a year in duties.”
The EU is requesting that a system of annual quotas replace the quarterly tariff-rate system, to “better reflect historical flows.” The US is requesting that the restrictions be maintained through the presidential election next year, and until the end of 2025. Since the EU’s request of the Biden administration has been rejected, the failure to agree could lead to the return of some of the tariffs next year.
However the EU has said it will not immediately reimpose retaliatory measures on US goods.
Sam Lowe, a partner at international advisory firm Flint Global said, “The EU might have been able to hold out for more from the US on improving the quota administration, but it would have required dragging this out until the end of the year and it was fairly common knowledge that member states didn’t want these tariffs to kick back in.”
At the same time, the Committee for European Construction Equipment (CECE) has sent an open letter to both EU and US leaders, which has urged them to end the conflicts over steel, aluminum, and large aircraft manufacturing.
The signatories to the letter noted the damage to industry which would come from the re-imposition of the tariffs, which could result in over €1.3 billion ($1.4 billion) being lost if there is no agreement reached by January 1st.
