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EU and US Reach Deal on Steel and Aluminium Tariffs

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On 31 October 2021, the EU and US issued a joint statement announcing that they had reached an agreement to end their dispute over steel and aluminium tariffs. This agreement removes the US “Section 232” tariffs on imports of EU steel and aluminium, imposed during the Trump administration, whilst the EU has agreed to suspend additional duties imposed on US goods in retaliation. Both sides have also agreed to suspend disputes initiated against each other at the WTO in relation to the tariffs.

The deal ends a prolonged stand-off between the EU and US that began following the US’s introduction of tariffs for imports of steel (25% tariff) and aluminium (10% tariff) in 2018. In response, the EU introduced retaliatory tariffs on US-manufactured whiskey, motor boats and motorcycles. The EU and US had been in negotiations since the start of the Biden administration to settle the trade dispute and (absent this agreement) the EU had planned to increase its tariffs again this December.

As part of the deal, the US has agreed to remove tariffs on the above EU exports, effective from 1 January 2022, through a tariff-rate quota (“TRQ”) system. Under the TRQ arrangement, “historically-based” volumes of EU steel and aluminium imports will enter the US tariff free:

  • For EU steel imports to the US, a total annual quota of 3.3 million metric tonnes, covering 54 product categories (see Annex 1), will be set and allocated on an EU member state basis in line with historical import values from 2015 to 2017. In order to be eligible for duty-free treatment, steel imports must have been “melted and poured” in the EU in accordance with US requirements.
  • For EU aluminium imports to the US, a total annual quota of (i) 18,000 metric tonnes for unwrought aluminium (covering two product categories) and (ii) 366,000 metrics tonnes for wrought aluminium (covering 14 product categories) will be set (see Annex 2). The import volumes will also be allocated on an EU member state basis in line with historical import values from 2018 to 2019, with the exception of foil (HS code 7607), where 2021 annualized data will be used.  

In parallel, the EU and US have also agreed to begin discussions on an arrangement (the “Global Arrangement on Sustainable Steel and Aluminium”) intended to facilitate the decarbonising of the steel and aluminium industries and to address “overcapacity in these industries caused by non-market practices in some economies”. The US and EU will now create a technical working group to develop a joint methodology and share relevant information for evaluating emissions connected with traded steel and aluminium.

Additionally, the US announced that it would be commencing a separate consultation with the UK for it to join the US / EU arrangement. It is possible this may result in similar relief from US steel and aluminium tariffs for British exporters, though currently these still remain in place. The US has also announced that a similar consultation will commence with Japan.   

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Christine Streatfeild is a Partner in the Washington DC Office and on the Steering Committee for the North America Trade Secrets Practice. She focuses on trade remedies and unfair competition cases, including forced labor investigations, antidumping and countervailing duty cases, safeguard measures, duties imposed for national security purposes (Section 232 duties), and Section 337 intellectual property and trade secrets disputes. She appears before the US International Trade Commission (ITC), US Department of Commerce (DOC), and in state and federal courts. Prior to joining Baker McKenzie, Christine served as the acting deputy director of the Generalized System of Preferences (GSP) and in the Environment and Natural Resources division of the Office of the United States Trade Representative. She has also served as an adjunct professor at the Krieger School, Johns Hopkins University, where she taught Global Trade, Policy and Competition. She is also on the 2021 USMCA Dispute Settlement Panels Roster (on behalf of the United States), a position she has held since 2019 (under the NAFTA). Christine focuses her practice on matters related to trade regulatory and intellectual property matters, including economic injury and damages, import duty compliance, and unfair competition allegations.

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Pablo M. Bentes is a partner in Baker McKenzie Geneva, where he heads the global WTO disputes practice of the Firm. Pablo focuses on representing WTO Members before the WTO Dispute Settlement Body and assists private clients and trade associations on how to leverage WTO disciplines to resolve trade disputes. Pablo is one of very few practitioners in the world to have successfully represented WTO Members in all stages in WTO dispute settlement proceedings, serving as lead counsel in oral pleadings before WTO panels and the Appellate Body.

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Jennifer Revis is a partner in the EU Competition and Trade Practice Group of Baker McKenzie's London office. She is acknowledged for her timely advice and responsiveness by the Legal 500. Jennifer has been on secondment to the UK customs authorities (Her Majesty's Revenue and Customs) in their tax and excise litigation department and to the Firm's European Law Centre in Brussels. Jennifer is frequently invited to speak at external conferences and regularly contributes articles to tax journals on customs matters such as De Voils Indirect Tax Journal.

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