US, EU say deal on tariffs a sign of rebuilt relationship

The U.S. and European Union are celebrating a new agreement settling their diplomatic rift over Trump-era steel and aluminum tariffs

Biden Italy G20 Summit (Copyright 2021 The Associated Press. All rights reserved)

The U.S. and European Union on Sunday celebrated a new agreement to patch up a trans-Atlantic rift over Trump-era steel and aluminum tariffs.

President Biden and European Commission President Ursula von der Leyen said at a joint appearance during the Group of 20 summit that the deal resolving the dispute would also address climate change by discouraging steel and aluminum production that generates high levels of carbon emissions that are blamed for warming the earth.

Biden said “dirty steel” made in China would be restricted from accessing their markets.

“By harnessing our diplomatic and economic power, we can reject the false idea that we can’t grow our economy and support American workers while tackling the climate crisis,” Biden said, who has been pushing the U.S. to aggressively address the threat posed by climate change. Biden is also scheduled to attend a major U.N. climate conference this week in Glasgow, Scotland.

Von der Leyen kept smiling at Biden and calling him “dear Joe” as they appeared to celebrate the deal, an apparent sign that the U.S. president had made progress in repairing relations with Europe after the partnership suffered during the Trump years.

“It will be a major step forward in achieving climate neutrality and it will ensure a level playing field,” she said, adding that the agreement was part of a renewed, forward-looking agenda with the U.S.

The agreement was first announced Saturday in Rome by U.S. national security adviser Jake Sullivan, U.S. Trade Representative Katherine Tai and U.S. Commerce Secretary Gina Raimondo. They said the Article 232 tariffs, as they are known, would not be removed entirely but that some quantity of European steel and aluminum will be allowed to enter the U.S. tariff-free.

In return for Europe dropping its retaliatory tariffs, the U.S. would ensure “that all steel entering the U.S. via Europe is produced entirely in Europe,” Raimondo said.

The easing of the tariffs is a key step in unwinding one of Donald Trump’s legacies as president as Biden has tried to reset U.S. relations with Europe.

The Trump administration had placed taxes on EU steel and aluminum in 2018, claiming the foreign products made by American allies were a threat to U.S. national security.

Europeans and other allies were outraged by Trump’s use of the Article 232 section of U.S. trade law to justify the tariffs, leading many to impose counter-tariffs on U.S.-made motorcycles, bourbon, peanut butter and jeans and hundreds of other items.

The back-and-forth hurt European producers and raised steel costs for American companies. The tariffs also did not achieve Trump’s stated goal of creating jobs at steel mills. The Bureau of Labor Statistics shows that jobs in the manufacturing of primary metals did rise slightly, to as much as 389,100 in 2019. But mills shed workers during the pandemic, and employment in the sector is roughly half of what it was in 1990.

The European Union took steps in May to improve relations. On some retaliatory tariffs, the EU temporarily suspended planned increases. This meant that American whiskey faced a 25% tax in Europe, instead of a planned 50% tax. The two sides faced a December deadline to avoid the higher tax rate.

The summit’s host, Italian Premier Mario Draghi, in a statement Saturday night expressed “great satisfaction “ for the tariff accord. The decision “confirms the further reinforcement underway of the already close trans-Atlantic relations and the progressive overcoming of the protectionism of the last years,” he said.

The announcement also was welcomed by Chris Swonger, president and CEO of Distilled Spirits Council of the United States, after what he called “three very difficult years of sagging American whiskey exports.”

“Lifting this tariff burden on American whiskeys not only boosts U.S. distillers and farmers, it also supports the recovery of EU restaurants, bars and distilleries hit hard by the pandemic,” Swonger said.