The European Union (EU) and the United States (U.S.) Government have agreed to a partial truce in a dispute over metal tariffs imposed by the immediate past president, Donald Trump and to open discussions on global over-capacity and China’s “trade-distorting” policies.
A news report by Reuters quoted the European Commission, which oversees EU trade policy, as saying on Monday that it will suspend a planned hike of retaliatory tariffs for up to six months. The tariffs would have added U.S. products from lipstick to sports shoes and doubled to 50% duties on U.S. bourbon whiskey, motorbikes and motor boats on June 1.
According to the news report, in a joint statement signed by European Commission Executive Vice President, Valdis Dombrovskis, U.S. Trade Representative, Katherine Tai and U.S Secretary of Commerce, Gina Raimondo, the leaders agreed to work together to find “effective solutions that preserve our critical industries”.
The planned discussions between the EU and the U.S Government would seek solutions before the end of the year to the issue of global steel and aluminium over-capacity.
Reuters reported that a month ahead of a visit to Brussels by U.S. President Joe Biden, one EU diplomat said it would have been “terrible optics” if the bloc had raised tariffs on Harley Davidson bikes and products of other U.S. firms.
Commenting, Head of the Trade Committee of the European Parliament, Bernd Lange, said the United States needed to come to a EU-U.S. summit with a “tangible commitment to reciprocate the EU gesture. Otherwise, tariff hikes would be justified.
According to the latest report, the United States will maintain its tariffs of 25% on steel and 10% on aluminium, which also apply to imports from China, India, Norway, Russia, Switzerland and Turkey.
It would be recalled that the Trump administration had cited U.S. national security grounds as the basis for its metals tariffs, which steelmakers such as Thyssenkrupp and Voestalpine said adversely affected them.
As a retaliatory fiscal measure, the EU denied that its exports posed any security threat and responded by placing its own tariffs on 2.8 billion euros ($3.4 billion) on U.S. products, including motorbikes, whiskey and orange juice. These will also remain in place.
The EU had urged the U.S. to suspend the metals tariffs for six months, mirroring the four-month suspension the two sides agreed in March for their aircraft subsidy dispute.
The Commission claimed that the U.S. tariffs affect 6.4 billion euros of EU metal exports and that it would “rebalance” the remaining 3.6 billion euros after three years, or after a favourable ruling by the World Trade Organization (WTO).