EU suspends tariff hike on US goods in talks over Trump steel levies

The European Commission announced Monday it will temporarily suspend a planned increase in tariffs on American goods as the U.S. and EU work to resolve a trade dispute started under former President Trump.

The EU will hold off on a scheduled hike to tariffs on U.S. goods initially imposed in 2018 after Trump levied tariffs on all imported steel and aluminum, according to the announcement. The tariffs cover a wide range of iconic U.S. exports, including Kentucky bourbon, Harley Davidson motorcycles, and other manufactured and agricultural goods. 

The U.S. will maintain its current tariffs of 25 percent on foreign steel and 10 percent on aluminum as it works with the EU on a long-term solution, The Associated Press reported. 

The tariff suspension comes as the U.S. and EU begin broader negotiations over how to quash three years of heightened trade tensions and unite against China’s influence on the global economy. In a joint statement released Monday, both pinned the cause of the conflict on “global excess capacity driven largely by third parties,” taking a shot at China’s history of flooding global markets with cheap, government subsidized metal.

“The distortions that result from this excess capacity pose a serious threat to the market-oriented EU and U.S. steel and aluminum industries and the workers in those industries,” said the joint statement from Commerce Secretary Gina Raimondo, U.S. Trade Representative Katherine Tai and European Commission Executive Vice President Valdis Dombrovskis.

“They agreed that, as the United States and EU Member States are allies and partners, sharing similar national security interests as democratic, market economies, they can partner to promote high standards, address shared concerns, and hold countries like China that support trade-distorting policies to account,” they wrote.

The Biden administration is facing both domestic and international political challenges in sorting through the legacy left by Trump’s trade policy, which inflamed tensions and raised barriers for both allies and adversaries.

Trump’s trade policy irritated Republican lawmakers and broke from decades of GOP support for free trade. But the former president’s tariffs on steel and aluminum — along with his tough stance toward Chinese industrial policy — were popular among many labor unions and Democrats from states that once boasted robust manufacturing.

While Biden administration officials have emphasized the needs to protect key U.S. industries, they’ve said little about their plans for Trump-era tariffs imposed on the EU and China. They’ve also emphasized the need for the U.S. and EU to unite against Chinese trade practices, which is complicated by Trump’s tariffs on European steel and aluminum.

News of the progress between the U.S. and EU elated advocates for American industries for Europe to drop tariffs on their goods.

“This news couldn’t come soon enough. Distillers across the United States are breathing a huge sigh of relief after bracing for a 50 percent tariff on American Whiskeys in just a matter of days that would have forced many craft distillers out of the EU market,” said Chris Swonger, president and CEO of the Distilled Spirits Council, in a statement. “We recognize there is still work to be done to get EU and U.S. spirits back to zero for zero tariffs. We greatly appreciate the Biden administration’s ongoing efforts to resolve these longstanding trade disputes and reduce the economic pain felt by those industries unfairly caught in the middle.”