Tariff truce may be a lifesaver for bourbon and Harley-Davidson
The Biden administration is set to announce it has reached a truce in a dispute with the EU over metal tariffs, sparing iconic products such as US bourbon whiskey from a doubling of EU duties in June, people familiar with the matter said.
A resolution could be announced as soon as Monday, said the people, who asked not to be identified because the talks are private.
At issue is a high-profile dispute that started in 2018 under former president Donald Trump, in which the US imposed duties on steel and aluminium from Europe, Asia and elsewhere, over risks to national security. The EU has since retaliated and on June 1 was set to double its tariffs on a list of American products to 50%.
Under the agreement with the Biden administration, the EU will refrain from increasing those tariffs and both sides will engage in a dialogue on steel overcapacity, according to the people.
The EU had previously proposed to suspend all duties on each other’s products for six months while negotiations on a long-term solution continue.
“We can only reiterate that the EU remains committed to finding a solution with the US to the unduly justified tariffs on steel and aluminium and to working with the US in tackling the root cause of the problem, which is the global steel overcapacity,” a spokesperson for the European Commission said at the weekend.
Negotiators on both sides of the Atlantic are working to eventually remove the tariffs but are not yet ready to do so, the people said.
President Joe Biden will participate in a US-EU summit in Brussels in June during his first foreign trip as the nation’s leader. Biden and his European counterparts are set to discuss trade co-operation, the White House said.
Trump imposed the 25% steel tariff, along with a 10% duty on aluminium imports, in March 2018, using an arcane national security provision in a 1962 trade law to justify the move. Some countries, including Brazil and South Korea, negotiated deals to avoid the tariff, and Trump dropped the duty for imports from Canada and Mexico. But the tariffs still apply for much of world.
American products affected by EU counter-tariffs include Harley-Davidson motorbikes, Levi Strauss jeans and bourbon whiskey. Business associations and legislators have asked that the US lift the duties, saying they do more harm than good.
AT ISSUE IS A HIGH-PROFILE DISPUTE THAT STARTED IN 2018 UNDER FORMER PRESIDENT TRUMP
The tariffs in place “have already exacted a heavy toll from US businesses and the workers they employ”, said John Murphy, senior vice-president for international policy at the US Chamber of Commerce. He noted an almost 40% drop in US spirits exports to the EU since the duties came into place.
In a Senate finance committee hearing on Wednesday, US trade representative Katherine Tai defended Trump’s metals tariffs, saying they “have really roiled our economy but were necessary to address a global overcapacity problem driven largely but not solely by China”.
The US has achieved its goal of blocking subsidised Chinese steel from the American market through other tools such as antidumping and countervailing duties, Murphy said. Separate tariffs imposed via section 301 of the Trade Act, under which Beijing’s practices were deemed unfair, have also deterred shipments. Chinese steel imports now account for less than 1% of US steel consumption, Murphy said.