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EU Eyes Reviving WTO Case Against US Amid Steel Tariff Spat

© AP Photo / Mark DuncanFinished galvanized steel coils await roll of the hot dip galvanizing line at ArcelorMittal Steel in Cuyahoga Heights, Ohio Friday, Feb. 15, 2013
Finished galvanized steel coils await roll of the hot dip galvanizing line at ArcelorMittal Steel in Cuyahoga Heights, Ohio Friday, Feb. 15, 2013 - Sputnik International, 1920, 08.12.2023
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In 2021, the EU and US reached a two-year deal to settle their steel and aluminum tariff dispute through the Global Arrangement on Sustainable Steel and Aluminum. The US reduced tariffs with a quota system, and the EU halted its restrictions, causing a trade imbalance with EU exporters. Without a new deal, tariffs may return next year.
The European Union is looking at reviving a World Trade Organization case against the United States. The trade spat stemming from the Trump administration's imposition of steel and aluminum tariffs, which led to reciprocal tariffs on goods exceeding $10 billion.
Brussels has expressed discontent with the current talks, accusing Washington of intransigence. Despite this, the EU is holding back on reintroducing reciprocal tariffs on American goods, which suggests a willingness to engage their counterpart across the Atlantic.
The EU's decision to restart the WTO case serves several purposes: it keeps the threat of future tariffs alive, maintains leverage over the US, and allows a prolonged negotiation period to avoid an imminent re-imposition of duties. It comes amid media reports that Brussels is wary of levying tariffs, since that step could unintentionally give a boost to Trump's political campaign in the 2024 American presidential election race.
In this April 27, 2018 file photo, a worker controls steel coils at the thyssenkrupp steel factory in Duisburg, Germany - Sputnik International, 1920, 02.08.2023
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US and EU Struggle to Resolve Steel and Aluminum Trade Dispute as Deadline Looms
The trade conflict can be traced back to Trump's decision to slap tariffs on European steel and aluminum, citing national security concerns. In response, the EU struck back with its own measures. Although a temporary truce was reached with the Biden administration in 2021, the core problem still remains unresolved.
In 2021, both parties agreed on a two-year truce to finalize the Global Arrangement on Sustainable Steel and Aluminum, aiming to resolve their tariff disagreement permanently. The US partially lifted its tariffs, implementing quota-based duties, while the EU suspended all its restrictive measures.
This arrangement resulted in a trade imbalance, with EU exporters incurring over $350 million in annual duties. Without a comprehensive agreement, some tariffs might be reinstated next year.
In the backdrop of the Washington-Brussels strained negotiations, the Biden administration's Inflation Reduction Act has emerged as another contentious issue. This act, aimed at bolstering the American economy and reducing inflation, has raised concerns within the 27-member EU bloc about its potential impact on European businesses and the broader transatlantic economic relationship.
The EU views certain provisions of the act as unfairly favoring American companies, like incentivizing US-centric production and sourcing, preferential treatment to American companies, especially in clean energy and electric vehicle sectors, threatening with deindustrialization on Europe.
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