United States, European Union Will Keep Metals Tariffs On Hold For Now
AsConnecting the Dots has reported several times this year, the U.S. government and officials from the European Union (EU) have been working to come to an agreement regarding the United States’ Section 232 tariffs on steel and aluminum.
After the penalties were put into place several years ago under the Trump administration, EU imposed retaliatory tariffs on several consumer products. At that point, the U.S. government suspended its Section 232 tariffs for the EU, putting a quota system in place instead. (The United States also has suspended the penalties for other jurisdictions, including for Canada and Mexico.)
With the agreement with the EU set to expire, negotiators have been working together to try to find a way forward. Those talks have so far been unsuccessful.
There does seem to be a temporary path forward, however. Late last week, European trade commissioner Valdis Dombrovskis told The Financial Times that he is in favor of postponing the reimposition of retaliatory tariffs on U.S. goods such as bourbon whiskey and Harley-Davidson motorbikes until after the 2024 U.S. presidential election.
In turn, U.S. officials have said they would be willing to agree to suspend the levies on steel and aluminum.
Commissioner Dombrovskis did argue the existing system is “not ideal” and said the EU does not want to prolong discussions “too long because this imbalance is to our disadvantage.”
Without the deal, the penalties would have gone back into place on January 1, 2024.
According to The Financial Times, the EU also is considering keeping pressure on the United States by reviving a World Trade Organization case against the steel tariffs. “Our goal is to permanently eliminate US tariffs . . . on EU steel and aluminum exports,” said a commission spokesperson.
As a reminder, when it comes to Section 232 tariffs, Connecting the Dots reports developments for members’ information only.
MSCI consistently has argued that global overcapacity and other unfair trading practices, particularly by China, have harmed the U.S. steel and aluminum markets. To address this circumvention, MSCI has advised federal officials to provide relief for producers up and down the supply chain and to consider the consequences of any new trade policy, including: the economic impact of global overcapacity on the entire domestic metals supply chain; transition times and implementation rules to any new policy; availability of domestic metals to meet U.S. national security needs, as well as general industrial and consumer demand; and trade flows under current free trade agreements, including the United States Mexico Canada Agreement (USMCA). MSCI also asked that Canada and Mexico be excluded from any trade penalties.
Click here to review all of MSCI’s advocacy on Section 232 tariffs.