EU Considers Extending Trade Truce on Steel and Aluminium with US

The European Union is contemplating an extension of the existing truce with the United States regarding steel and aluminium trade, aiming to avoid the re-imposition of tariffs on around $10 billion worth of cross-Atlantic exports. This potential extension is seen as a means to navigate the current impasse in negotiations and allow more time for a comprehensive agreement before the 2024 US presidential election.

At the core of the discussions is the Global Arrangement on Sustainable Steel and Aluminum, an initiative established to address a dispute that originated during the Trump administration. The US had imposed tariffs on metal imports from Europe, citing national security concerns, leading to reciprocal measures from the EU. Although a temporary ceasefire was reached in 2021, it is set to expire at the end of the year.

Sources familiar with the EU's strategy reveal that talks are underway to explore how to prolong the truce and potentially prevent tariffs from automatically resuming. The interim deal, brokered two years ago, introduced a tariff-rate quota system, with duties applied beyond specified thresholds, while the EU suspended its retaliatory measures. However, this arrangement has favored the US, prompting the EU's trade chief to highlight its advantages for the US.

The quota system, designed to reflect historical trading patterns, has proven inflexible and resulted in significant European steel still facing duties, creating additional bureaucratic challenges for European exporters. Resolving this imbalance is a crucial aspect of the ongoing negotiations with the Biden administration, according to insiders.

Failure to address this disparity may force the EU to choose between re-imposing tariffs on US goods or accepting the current conditions, effectively conceding to the US. The goals of the Global Arrangement include tackling the global surplus of steel and aluminium and reducing carbon emissions from these industries. While some progress has been made on the former, achieving a comprehensive agreement has proven challenging, especially after the recent summit in Washington failed to yield a political agreement.

The EU is pressing the US to present a concrete plan for eliminating tariffs and the quota system. A key sticking point in the negotiations is the EU's insistence that the US make the quotas more flexible, considering the strain they impose on European firms. As discussions continue, time is of the essence, and significant differences persist between the EU and the US. The EU remains focused on securing a resolution that addresses the concerns of both parties and establishes a more equitable trade environment.