Negotiators reached an agreement on Saturday, said US national security adviser Jake Sullivan, speaking on the sidelines of the G20 summit in Rome
The deal contains agreed rules to prevent steel from China from being re-exported tariff-free to the US via the EU, officials said
The US and the European Union have concluded a trade truce on steel and aluminium that will allow the allies to remove tariffs on more than US$10 billion of their exports each year.
Negotiators reached an agreement on Saturday as they worked to balance market demands and climate change, said US national security adviser Jake Sullivan, speaking on the sidelines of a G20 summit in Rome. Bloomberg reported earlier that the two sides were on the brink of a deal.
“The agreement, ultimately, to negotiate a carbon-based arrangement on steel and aluminium trade addresses both Chinese over production and carbon intensity in the steel and aluminium sector,” Sullivan told reporters on Saturday. Negotiators were working hard to reach a deal before December 1, when the European tariffs are set to double.
The deal marks a significant moment in repairing the US trade relationship with Europe after Donald Trump’s disruptive presidency.
“We’ve reached an agreement with the EU which maintains the 232 tariffs, but allows limited volumes of EU steel and aluminium to enter the US tariff-free,” said US commerce secretary Gina Raimondo.
“It was a very successful negotiation and we agreed on a way forward for how to face our shared challenge which is global excess capacity mainly by China,” she said.
Raimondo said the deal would help address supply-chain issues that have been hurting US businesses.
“We are also experiencing unprecedented supply-chain disruption and we fully expect this agreement will provide relief in the supply chain and drive down cost increases as we lift the 25 per cent tariffs and increase volume,” she said.
US officials said that the deal involves so-called tariff-rate quotas, which allow countries to export specified quantities of a product to other nations at lower duty rates, but subjects shipments above a predetermined threshold to higher tariffs.
The deal contains agreed rules to prevent steel from China from being re-exported tariff-free to the US via the EU, the officials said.
The US and EU also agreed to negotiate a carbon-based arrangement on steel and aluminium trade and create greater incentives for reducing carbon intensity in production of the metals, US officials said.
The United Steelworkers union applauded the deal, saying it will help keep US industry competitive.
“It will also provide a much-needed opportunity to address the non-market predatory practices of China and other countries that have distorted global markets, while also spurring a dialogue over climate concerns stemming from countries whose industries are far more carbon intensive than those in the United States and the EU,” the group said in a statement.
The dispute 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, targeting products including Harley-Davidson Inc motorcycles, Levi Strauss & Co jeans and bourbon whiskey. With Saturday’s deal, the EU agreed to drop those retaliatory tariffs.
