Steel Tariffs Eliminated between the U.S. and EU

The United States and the European Union ended their steel and aluminum trade disputes in 42 months. The United States opted to do so in order to strengthen its alliance with Europe with its trade disputes with China showing no signs of subsiding and because the prices of steel products in the United States have soared since the previous administration’s tariff imposition.

According to the U.S. government, the agreement is meaningful in terms of the partnership between the two regions, U.S. worker protection, climate change response, and response to oversupply and unfair competition caused by China. At present, the U.S. government is closely monitoring the export of cheap Chinese steel to the United States via a third region such as Europe. It stressed that the zero tariff will be applied only to steel produced in Europe.

In addition, from now on, steel products not satisfying strict carbon emissions regulations cannot be exported to the United States. According to the U.S. government, the oversupply has been possible because the application of such strict regulations has been absent.

The agreement will lead to a decrease in tariff on EU steel products from 25 percent to zero, which is expected to result in lower selling prices in the United States. “The steel cost has tripled for the past 12 months and this has resulted in more expensive automobiles, consumer electronics, and so on,” the U.S. government said, adding, “The ongoing global supply chain issues have been triggered as a result.”

Their agreement is likely to have mixed effects on South Korean companies in the industry. Competition is likely to intensify in the group of countries exporting steel to the United States and this may adversely affect South Korean steel exporters.

At present, quotas are in effect as to South Korea’s steel and aluminum exports to the United States. Specifically, South Korean steelmakers’ annual exports to the United States cannot exceed 2.63 million tons. Their steel and steel product exports to the United States totaled 2.52 million tons and 1.55 million tons in 2016, respectively. However, the volumes dropped to 1.28 million tons and 0.97 million tons in 2020.

The Ministry of Trade, Industry and Energy is trying to raise the upper limits. U.S. Trade Representative Katherine Tai is scheduled to visit South Korea on Nov. 18 and the matter is likely to be discussed during her stay.