U.S. reaches deal with European Union over steel and aluminum tariffs

The U.S. and the European Union have reached an agreement to settle their diplomatic rift over Trump-era steel and aluminum tariffs, the White House announced Saturday, as President Joe Biden is in Rome attending the Group of 20 summit.

The Trump administration had placed taxes on EU steel and aluminum in 2018 on the claim that the foreign products produced by American allies were a threat to U.S. national security. Europeans and other allies were outraged by Trump’s use of Article 232 to justify the tariffs, leading many to impose countertariffs on U.S.-made motorcycles, bourbon, peanut butter and jeans, among other items.

National security adviser Jake Sullivan, U.S. Trade Representative Katherine Tai and Commerce Secretary Gina Raimondo announced the agreement Saturday. They said that the Article 232 tariffs won’t be removed entirely but that some quantity of European steel and aluminum will be allowed to enter the U.S. without tariffs under the deal.

They did not provide specifics on how much material would be allowed under the agreement.

“We were able to reach an agreement whereby the EU will drop their retaliatory tariffs (on American goods),” Raimondo said. The agreement would also ensure “that all steel entering the U.S. via Europe is produced entirely in Europe,” Raimondo added.

The easing of the tariffs is a key step in unwinding one of Trump's legacies as Biden has tried to reset the U.S. relationship with Europe.

It appears to be an attempt to strike a balance between keeping protections for U.S. producers nominally in place, but addressing the cost increases the tariffs have led to, in a moment of rising inflation that has lasted longer than Biden officials had first anticipated.

This back-and-forth hurt European producers and raised steel costs for American companies. The tariffs also did not achieve Trump’s stated goals of creating jobs at steel mills. The Bureau of Labor Statistics show that jobs in the manufacturing of primary metals did rise slightly, to as much as 389,100 in 2019. But mills shed workers during the pandemic, and employment in the sector is roughly half of what it was in 1990.

The European Union took steps in May to improve relations. On some retaliatory tariffs, the EU temporarily suspended planned increases. This meant that American whiskey faced a 25 percent tax in Europe, instead of a planned 50 percent tax. The two sides faced a December deadline to avoid the higher tax rate.

The announcement was welcomed by Chris Swonger, president and CEO of Distilled Spirits Council of the United States, after what he called “three very difficult years of sagging American whiskey exports.”

“Lifting this tariff burden on American whiskeys not only boosts U.S. distillers and farmers, it also supports the recovery of EU restaurants, bars and distilleries hit hard by the pandemic,” Swonger said.

NPR contributed to this report.

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