European Commission President Ursula von der Leyen and US President Joe Biden agreed on a truce in the steel and aluminum tariff war on the first day of the G20 summit in Rome.
The dispute began in 2018, when former US President Donald Trump imposed 25% and 10% tariffs on steel and aluminium imported from Europe, Asia and elsewhere, citing national security risks. The EU subsequently retaliated by placing tariffs on US products such as bourbon whiskey and Harley-Davidson Inc. motorbikes.
Trade tensions have also had an impact on the secondary commodities market. For example, in the case of aluminium, China imposed a 25% tariff on US aluminium scrap exports in retaliation. This, coupled with China’s aim to protect the environment and encourage domestic recycling, has significantly reduced its consumption of foreign scrap in recent years, forcing many Western distributors to seek new markets in emerging countries in Asia and Africa.
The new agreement announced on Saturday allows a limited volume of steel and aluminium from the European Union to enter the United States without tariffs. The volume has not yet been specified, although there is speculation that the limit will be 3.3 million tonnes.
Beyond lifting tariffs, the US and the EU also plan to address the threat posed by climate change and production overcapacity in the steel industry, one of the world’s largest emitters of CO2. It is also stipulated that steel and aluminium must be produced entirely within the EU in order to prevent non-EU metals from being processed in Europe and exported to the US, especially those from China, which has recently sold its steel cheaply on international markets.
The global agreement will be worked out over the next two years to promote “green” steel and aluminium production and will be open to all countries that want to join, including China.