Bloomberg / Brussels
The European Union agreed to avoid escalating its dispute with the US over metal tariffs, sparing iconic products such as Harley-Davidson motorbikes from a doubling of EU duties next month.
At issue is a high-profile disagreement that started in 2018, when former US President Donald Trump imposed duties on steel and aluminium from Europe, Asia and elsewhere, citing risks to national security. The EU subsequently retaliated and tariffs on a range of American products were set to jump to 50% on June 1.
Under the agreement with the Biden administration, the EU will refrain from increasing those tariffs and both sides will engage in a dialog about overcapacity in the steel industry, according to a tweet from EU Commissioner Valdis Dombrovskis. Negotiators on both sides of the Atlantic are working to eventually remove the duties but are not yet ready to do so, officials have said.
In our effort to reboot transatlantic relations, EU will temporarily suspend the increase of its rebalancing measures on US 232 steel & aluminium tariffs. This gives us space to find joint solutions to this dispute & tackle global excess capacity.
“This decision affirms our determination to find effective joint solutions to this dispute which will end the tariffs imposed on the EU for reasons of national security, and to tackle global steel and aluminium excess capacity, and preserve our critical industries,” Dombrovskis said in an e-mailed statement. “By suspending our measures, we are creating the space to resolve these issues before the end of the year.”
The truce comes after weeks of talks between senior trade officials and negotiators, with both sides eager to avoid an escalation and continue rebuilding their economic alliance. Earlier this year, the EU and the US also agreed to suspend duties to ease a 17-year dispute over illegal aid to the world’s biggest aircraft makers.
Officials say it’s a gesture of goodwill from the bloc as it seeks to repair ties with its most important partner and prepare the ground for talks to suspend the duties altogether.
“We are encouraged by today’s announcement that tariffs affecting our products will not escalate from 31% to 56%,” Harley chief executive officer Jochen Zeitz said in a statement. The Milwaukee-based company’s “employees, dealers, stakeholders and motorcycles have no place in this trade war.”
The EU’s move comes at an important moment in transatlantic relations, with President Joe Biden due to participate in a US-EU summit in Brussels next month during his first foreign trip as the nation’s leader. Biden and his European counterparts are set to discuss trade co-operation, the White House said.
Trump imposed the 25% steel tariff, along with a 10% duty on aluminium imports, in March 2018, using an arcane national-security provision in a 1962 trade law. Some countries, including Brazil and South Korea, negotiated deals to avoid the levies, and Trump dropped the duties for imports from Canada and Mexico. But the tariffs still apply for much of world.
In addition to motorbikes, the EU counter-tariffs targeted other iconic American products such as Levi Strauss & Co jeans. Business associations and lawmakers have asked that the US lift the duties, saying they do more harm than good.
“This news couldn’t come soon enough,” said Chris Swonger, CEO of the Distilled Spirits Council. “Distillers across the US are breathing a huge sigh of relief.”
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