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Joe Biden’s commerce secretary has warned that protecting American steel is a matter of national security, adopting predecessor Donald Trump’s position as European and US officials race to avoid an escalation in tariffs later this year.
Trump imposed hefty duties on imports of steel and aluminium from Europe and other countries in 2018, controversially justifying the measure on national security grounds.
The EU retaliated with its own tariffs on a range of US imports, but shelved plans to increase those tariffs in May in a gesture aimed at settling the dispute. The tariffs are set to be applied in early December.
“We would like to come to a resolution,” Gina Raimondo told The Financial Times. “Having said that, we need to protect the US steel industry. For every year in the 10 years before the tariffs were imposed, we never got above 80 per cent capacity. That is a national security risk, it’s an economic risk.”
Valdis Dombrovskis, the EU trade commissioner, held meetings with Raimondo and US trade representative Katherine Tai earlier this week as the two sides tried to thrash out a deal.
Tai said the countries were talking “intensively” to reach an agreement.
European officials have insisted that the EU does not present a national security threat to the US, although they have acknowledged that global excess capacity threatens both the European and US steel industries.
Negotiators have given themselves until the beginning of December to find a settlement, which is also meant to address the oversupply of steel resulting from production in countries including China. However, Dombrovskis said this week that the EU would need to reach an agreement with the US by early November to allow it time to prepare to either waive or reimpose tariffs on American goods. EU officials say that it is impossible to suspend the tariffs for a second time.
Removing the tariffs will be politically painful for the US president because they are popular within the politically powerful steel industry and in mill states, including Indiana, Ohio and Pennsylvania, that will be heavily contested in the next elections.
While EU officials initially hoped for a removal of the tariffs with nothing to replace them, Dombrovskis has said Europe was “ready to look [at] other solutions, understanding the fact that the US also is interested in protecting its steel industry”.
The US could also propose some form of export quota, though the EU has already ruled that out. Or it could opt for converting the tariffs into “safeguards” designed to deal with a sudden flood of imports, though those would be hard to square with World Trade Organization rules.
The discussions over the tariffs are part of a broader effort by the US and EU to strengthen transatlantic ties following the bitterness of the Trump years.
Earlier this year, the EU and US agreed to suspend a 17-year dispute over aircraft subsidies, lifting the threat of billions of dollars in punitive tariffs on their economies in a boost to transatlantic relations.
The deal takes the form of a five-year accord to suspend punitive tariffs linked to the original disagreement. Coupled with that is the creation of a ministerial-level working group to discuss subsidy limits and overcome any issues that may arise between the two sides.