The European Union has announced its decision to extend until 31 March 2025 the suspension of its rebalancing tariffs on US products in the context of the steel and aluminium dispute. Initially implemented during the Trump Presidency, the EU rebalancing tariffs on US exports were a response to the US “Section 232” tariffs on steel and aluminium.
This extension is the result of an agreement reached with the US. The EU prolongs the suspension of rebalancing tariffs in return for the US extending the suspension of its tariffs for historical trade volumes that are reflected in the Tariff-Rate Quota (TRQ) system established in January 2022. In addition, the US agreed to provide for further exclusions from the tariffs for EU exporters.
The extension, published on last 19th December, in the Official Journal of the EU, will result in EU steel and aluminium exporters saving approximately €1.5 billion in tariffs annually. The US must complete its own procedures to extend its TRQ system for EU exports of steel and aluminium as of 1 January 2024. This prolonged suspension of tariffs gives businesses on both sides of the Atlantic certainty, facilitating the smooth flow of trade.
The EU will continue to engage constructively with the US to preserve its legal rights and remove US 232 tariffs on EU exports for good. Work between the EU and the US also continues on addressing global overcapacity and decarbonisation of steel and aluminium sectors in the context of discussions on a Global Arrangement on Sustainable Steel and Aluminium (GSA). The mutual prolongation of tariff suspensions provides the necessary time and policy space to find agreement on the remaining GSA issues.
Background
In 2018, the US introduced tariffs on €6.4 billion of European steel and aluminium exports. In response, the EU introduced rebalancing tariffs on US exports to the EU of a value of €2.8 billion. In 2022, the EU suspended these measures fully until 31 December 2023 to provide time to work together on a longer-term solution. The US replaced the US Section 232 tariffs with a tariff-based quota system based on historical trade volumes, resulting in above-quota EU steel and aluminium still being subject to tariffs.
In 2022, the EU exported 3.8 Million Metric Tonnes (“MMT”) of steel to the US. 1.7 MMT of EU exports benefitted from the duty-free treatment under the US 232 TRQs. In addition, according to data shared by the US administration, the US granted 1.5 MMT of further exclusions to EU exporters.
With regard to aluminium, in 2022 the EU exported 289 Thousand Metric Tonnes (“TMT”) of aluminium to the US. However, only 146 TMT of EU exports benefitted from the duty-free treatment under the US 232 TRQs. In addition, according to the data shared by the US administration with the European Commission, the US administration granted 70 TMT of exclusions to EU exporters.
SOURCE: PRESS RELEASE – EUROPEAN COMMISSION
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