The British newspaper, Financial Times, reported that the frozen trade dispute over steel has become an early test for the European Union’s relationship with the incoming administration of US President-elect Donald Trump.
The outgoing US President Joe Biden had reached a truce with the European Union in the conflict that erupted when former President Donald Trump imposed tariffs on steel and aluminum in 2018, but each side is scheduled to reimpose its tariffs on the other next year.
The newspaper quoted Rufino Hurtado, the trade representative at the US mission to the European Union, as saying that the Commission must make a choice, as March 2025 will not be long after the inauguration of the US president-elect. He added that it is entirely up to the European Union to decide what will happen in 2025 regarding these retaliatory tariffs, whether to extend the suspension again or allow them to return.
The newspaper pointed out that Trump, who was re-elected, threatened to impose tariffs ranging from 10 to 20 percent on all EU imports, and attacked the union for selling more to the United States than it buys from it.
It added that under the Biden agreement, the United States replaced the tariffs it imposed in 2018 of 25 percent on steel and 10 percent on aluminum with a quota system, while the European Union suspended its retaliatory tariffs on American goods.
It quoted Hurtado at a press conference in Brussels that although the European Union and the United States “were closer than ever” on most issues, Brussels had stalled progress in talks over the past three years.
The newspaper pointed out that the two sides agreed to establish a “Green Steel Club” in 2021 when the dispute ended, explaining that the idea was based on agreeing on environmental standards with the aim of preventing cheap Chinese metals made using fossil fuels from flooding the markets of the United States and the European Union.
Hurtado said the US had made “ambitious” proposals but that they were “not consistent with the EU’s goals,” according to the newspaper.
The Financial Times also quoted Valdis Dombrovskis, the EU’s trade commissioner, as saying the proposed arrangement on steel and aluminium would have to be in line with multilateral trade rules.
EU officials also argued that the US plan, which favours domestic producers, would violate World Trade Organisation rules, according to the newspaper.
It noted that Brussels wants the Green Steel Club to be based on its own carbon border adjustment mechanism, which will impose tariffs on imports according to the amount of carbon they emit starting in 2026. This would also affect US steel, as the country does not have a national carbon pricing system, a mechanism or system through which carbon prices are set, such as the carbon pricing system through which carbon emissions are charged.
The newspaper reported that EU producers still pay about $300 million a year for metal exports that exceed Quotas imposed by the United States to resolve the crisis. The European Union is scheduled to re-impose customs duties on US imports worth 4.8 billion euros starting March 31.
The newspaper quoted an EU official who requested anonymity as saying that they aim to find a solution to this issue, pointing to the imbalance of matters, as EU exporters are still paying some customs duties.
It pointed to the decline of European stocks and currencies against the dollar yesterday, Tuesday, as investors worry about the impact of a more hawkish approach under Trump’s second presidency.
This comes, according to the newspaper, after reports that US Senator Marco Rubio, a hardliner against Iran and China, who works on the Senate Foreign Relations Committee, will become Secretary of State in the Trump administration.
The newspaper noted that traders are also taking into account the increasing possibility that Republicans will control the Senate and House of Representatives within the US Congress, giving Trump more freedom to push for major tax cuts and strong customs tariffs.
Investors are concerned that European manufacturers will suffer a double whammy of US tariffs on exports and the possibility that China will flood the region with cheap imports that will undermine local companies, especially automakers. “The rest of the world is under pressure, Europe is under pressure here, and China will be hit hard because it has become a major target for tariffs,” said Thomas Wildeck, chief European economist at T. Rowe Price.
