The European Union (EU) and USA have reached an agreement to put aside their dispute over the duty that Washington imposed on EU imports of steel and aluminum during the presidency of Donald Trump (2017-2021), thus closing an episode marked by trade tensions and disagreements.
Announcement of intentions
Republican Donald Trump came to the White House in 2017 after an electoral campaign based on protectionism and unilateralism, principles that he applied during his presidential term.
For the relationship with the EU, it was a clear contrast to his predecessor, Barack Obama (2009-2017), who was negotiating a free trade agreement with Brussels, the controversial TTIP.
On March 1, 2018, Trump announced his intention to impose tariffs of 25% on steel imports and 10% on aluminum imports from some countries, saying they would be in effect “for a long period of time.”
The next day, he claimed on Twitter that “trade wars are good” and “easy to win.”
The community reaction was not long in coming and the then president of the European Commission, Jean-Claude Juncker, declared that same day that the EU “must take action” in the face of the imposition of tariffs on steel and aluminum by the US and accused Washington to start the “escalation”.
He also described the measure announced by Trump as “regrettable”, “unilateral” and unjustified, adding that Europeans are not “naive” and that they would respond accordingly.
In a report sent by the US Department of Commerce in mid-February of the same year, the application of heavy tariffs on steel and aluminum imports of up to 50% was recommended, and the possibility of adopting quotas was raised.
The European Commission never took Washington’s argument seriously, which claimed to adopt the tariffs for national security reasons, and was committed to tackling the problem of global overcapacity in the steel and aluminum sector through collaboration, in the face of protectionism.
The blood does not reach the river
On March 8, 2018, Trump officially signed the imposition of tariffs on steel imports of 25% and 10% for aluminum, from which Mexico and Canada were exempt for the moment.
Despite this step, it took fifteen days for the measures to take effect, leaving the door open for further exemptions.
Finally, on March 22, the US president decided not to apply the tariff measures to the European Union, Australia, Argentina, Brazil and South Korea, in addition to Canada and Mexico.
“What (Trump) has decided to do is suspend the imposition of tariffs on these countries,” the then head of US Foreign Trade, Robert Lighthizer, told the Senate Finance Committee.
The end of the honeymoon
After that first exemption, on May 31, 2018 Trump applied the tariffs to imports of steel and aluminum from the community club, Canada and Mexico.
“We have decided not to extend the exemption for the EU, Canada and Mexico, so they will be subject to tariffs of 25% and 10%” on steel and aluminum, said Wilbur Ross, US Secretary of Commerce.
The objective of the first exemption was to allow time for negotiations, but Ross stressed that although “there was progress in the talks with the EU”, they were not sufficient “to maintain the temporary exemptions or achieve definitive exemptions.”
EC President Jean-Claude Juncker called the imposition of tariffs “protectionism, pure and simple.”
“We will defend the interests of the EU … the US leaves us no choice but to proceed with the imposition of additional tariffs on a number of US imports,” Juncker said in a statement.
On June 1, the community club formally denounced the United States to the World Trade Organization (WTO) over the tariffs.
The European Union also imposed that same month tariffs worth 2.8 billion euros on a list of products from the United States, such as sweet corn, orange juice or blueberries.
All products included in the list would be subject to additional tariffs of 25%, except for decks of cards, which would have 10%.
The figure of 2.8 billion euros was the maximum that the EU could impose at the time, despite the fact that the total of European steel and aluminum affected by the US levies reached 6.4 billion euros.
The remaining 3.6 billion euros could be added after a favorable decision in the dispute brought before the WTO or when three years have passed since the first imposition of the tariffs by the US.
In a climate of trade tension, Trump even threatened to impose tariffs on European cars, a move that ultimately did not materialize.
Change of tone
The arrival of Democrat Joe Biden to the White House marked a change in transatlantic relations and the launch of negotiations between Brussels and Washington to eliminate the measures that had damaged trade during the presidency of Donald Trump.
In fact, in June the United States and the European Commission already agreed to suspend the tariffs that had been imposed reciprocally as a result of the conflict over subsidies to Airbus and Boeing, another dispute that marked Trump’s relationship with the Twenty-seven.
To encourage dialogue, Brussels has already agreed this year to postpone the second round of “rebalancing measures” worth 3.6 billion euros, which were to enter into force on June 1, until December 1.
Finally, the United States and the European Commission today confirmed an agreement suspending US steel and aluminum tariffs and community countermeasures.
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