U.S., EU Face Threat of Resumed Tariffs as Steel Deal Deadline Nears

The U.S. and the European Union could see a renewal of tariffs on each other’s goods as soon as this fall unless they are able to conclude negotiations before then on a steel trade agreement.

In October 2021 the U.S. lifted its Section 232 tariffs on steel and aluminum products imported from the EU after establishing a tariff-rate quota designed to limit such imports to “a sustainable historic level” (i.e., the volume shipped prior to the 2018 imposition of the tariffs). The EU, in turn, suspended its related retaliatory tariffs on U.S. goods and determined not to implement a further tariff increase that had been scheduled to take effect later that year. The two sides also suspended their related World Trade Organization disputes.

However, those actions could be unwound if the U.S. and the EU fail to conclude by October negotiations on a global arrangement designed to (1) discourage trade in high-carbon steel and aluminum that contributes to global excess capacity from other countries and (2) ensure that domestic policies support lowering the carbon intensity of these industries.

Moreover, prospects for reaching a deal appear uncertain. U.S. Trade Representative Katherine Tai met recently with European Commission Executive Vice President Valdis Dombrovskis to discuss the talks, and USTR characterized the discussion as “direct and candid,” language typically used to signal disagreement. USTR also stressed the need for “ambitious proposals” and for working “at the deep level of trust, commitment, and confidence that characterizes the best of the partnership” between the two sides, suggesting that the White House feels Brussels’ efforts in both areas have so far been insufficient.