Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The European Union (EU) and the U.S. have taken steps to bring an end to a damaging feud over steel and aluminum tariffs started by former U.S. President Donald Trump's administration in 2018.

In a joint statement, European Commission Executive Vice President Valdis Dombrovskis, United States Trade Representative Katherine Tai and U.S. Secretary of Commerce Gina Raimondo announced the start of discussions to address global steel and aluminum excess capacity. The parties agreed to a "need for effective solutions that preserve our critical industries, and agreed to chart a path that ends the World Trade Organization (WTO) disputes following the U.S. application of tariffs on imports from the EU under section 232." The agreement offsets an increase in tariffs that was scheduled to begin in the coming months.

All parties agreed there was a large negative impact on their industries stemming from global excess capacity "driven largely by third parties," with the main culprit being China, which saw very little impact on steel output during the pandemic.

"The distortions that result from this excess capacity pose a serious threat to the market-oriented EU and U.S. steel and aluminum industries and the workers in those industries," they stated. They agreed that, as the United States and EU Member States are allies and partners, sharing similar national security interests as democratic, market economies, "they can partner to promote high standards, address shared concerns, and hold countries like China that support trade-distorting policies to account."

Industrial Info is tracking more than 119 active capital steel projects in the U.S., with a combined worth of US$13.7 billion.


In Europe, excluding Russia, Industrial info is tracking 375 active capital steel projects, with a combined worth of US$10.6 billion.


The dispute started in 2018 when former U.S. President Trump imposed tariffs of 25% on steel imports and 10% on imported aluminum from the EU and Canada. Trump imposed the tariffs after an investigation found that imports threatened to impair U.S. national security as defined by Section 232 of the Trade Expansion Act of 1962. The move would have cost the European Union more than 6.4 billion euros (US$7.8 billion). In June 2018, Europe and Canada announced tariffs on up to 2.8 billion euros (US$3.4 billion) worth of U.S. goods in retaliation to the steel tariffs. The European Commission said import duties of 25% would be slapped on a wide range of U.S. goods, ranging from whiskey and tobacco to motorcycles, clothing, steel and foodstuffs. For additional information, see October 9, 2019, article - Europe's Steel Sector Suffers as U.S. Tariffs Bite and June 11, 2018, article - Europe, Canada Strike Back with Tariffs on U.S. Goods.

At the end of last year, the EU-led Global Forum on Steel Excess Capacity, which was established in 2016, called on the G20 international forum of major economies to address the excess capacity. Since 2019, China, India and Saudi Arabia have disengaged from the Forum. The Forum said that global excess capacity in 2020 was going to increase significantly, to a level of at least 606 million metric tons, equivalent to three times the EU's total steelmaking capacity. It predicted that the excess capacity was "likely to remain high for the foreseeable future with yet again a damaging impact on the steel sector, as well as related industries and jobs".

Steel prices in the U.S. are running at about three times what they were before the pandemic. Earlier this week, the American Iron and Steel Institute (AISI) and other groups wrote a letter to President Joe Biden, saying, "Eliminating the steel tariffs now would undermine the viability of [the U.S. steel] industry. Opponents of the steel tariffs argue that they should be eliminated to increase supply, given the current environment of rising prices and long lead times. This ignores the fact that the COVID-19 pandemic has posed unprecedented, but temporary, challenges to global supply chains in many industries--including lumber, semiconductors, concrete, agricultural products and cleaning products--as manufacturers respond to rapid and unpredictable shifts in customer demand and logistical difficulties. The same is true for steel."

In response to the discussions between the U.S. and EU, AISI Chief Executive Officer Kevin Dempsey said, "To be successful, the bilateral discussions must take into account that, while China is the single largest source of global steel oversupply, subsidies and other market distorting policies in many countries are contributing to the overcapacity crisis --and that injurious surges in imports have come from every region of the world."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.

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