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Steel, aluminum tariffs cloud renewed US-EU trade cooperation

·3-min read
US and European officials renewed cooperation at the inaugural Trade and Technology Council (TTC) meeting in Pittsburgh, the relations remain strained over metals tariffs imposed by Donald Trump (AFP/Nicholas Kamm)

The United States and European Union made strides in restoring good relations this week through renewed cooperation on key trade and technology issues, but that fragile peace could shatter again if the sides fail to resolve the conflict over US steel and aluminum tariffs.

The dispute has plagued transatlantic trade relations for more than three years, but was not on the agenda of the inaugural meeting of the EU-US Trade and Technology Council (TTC) which wraps up Thursday.

But metals tariffs nevertheless cast a shadow over the enthusiastic expressions by officials from Brussels and Washington about their renewed collaboration following the rocky years under Republican president Donald Trump, who upended relations with friend and foe alike.

The Europeans are hoping for a gesture from President Joe Biden's administration that will clearly signal a change from Trump, at least on trade policy.

European commissioner for trade Valdis Dombrovskis said earlier this week that the discussions to settle this dispute were in "advanced stages."

But after meeting with US Commerce Secretary Gina Raimondo and more informal discussions, a European official acknowledged that finding a solution "will not be easy."

"We need to explore all possible options," including whether the option of setting import quotes would be "favorable to us," the official told reporters on the sidelines of the TTC meeting.

Trump in June 2018 imposed tariffs of 25 percent on steel and 10 percent on aluminum from several economies, including the European Union.

The Europeans retaliated by slapping duties on iconic American products like Harley-Davidson motorcycles, Levi's blue jeans and bourbon.

Beyond the economic impact, the US action rankled in Brussels since Trump cited national security concerns as justification for the tariffs.

- 'Win-win' -

"We don't see ... ourselves as threat to national security in the US," the European official said. But the "sticking point" is finding a permanent solution.

But governments on both sides of the Atlantic face pressure from industrial interest groups, and Biden too has made promises about protecting American workers, while US Trade Representative Katherine Tai has stressed the need to rein in excess global production.

Asked about the possibility of accepting export quotas, the European official said it would depend on the offer, since "it must be a win-win situation."

Dombrovskis has cautioned that the clock is ticking to find a solution.

In June, the sides opened talks on the dispute, setting a December 1 deadline to find an agreement, and the EU delayed a planned tariff increase that was set to take effect June 1.

Dombrovskis said officials need to reach a deal by early November "because we need more or less a month for internal EU procedures to make sure that its automatic increase of retaliatory tariffs does not take place."

- Battered bourbon -

US bourbon distillers are watching the debate with concern, as they face the prospect that duties on their wares will double to 50 percent on December 1, further harming exports to the EU which have fallen by 37 percent in the past three years.

In a letter this week to Tai and Raimondo, 50 federations representing the American alcohol industry urged negotiators to quickly defuse the conflict.

But "the positions are far apar," the European official acknowledged.

However, there is a "common understanding" that it needs to be solved.

Dt/jum/led/hs/st

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