The US and EU agreed on the November deadline after EU trade chief Valdis Dombrovskis and US Commerce Secretary Gina Raimondo spoke on Friday July 29, Politico reported on Monday, citing an unnamed European official. President Trump announced the imposition of tariffs on steel and aluminium imports on national security grounds in March 2018.
“This latest consideration by the Biden administration is most welcome and long overdue,” John Foster, the president of Partners in Steel International Inc, told Fastmarkets. “As we and many others have said from the outset, the national security basis for the 232 tariffs was without foundation. This is also why the Institute is a strong advocate of the bipartisan approach in the Senate to make the Department of Defense an integral governing factor in such decisions.”
The Biden administration and the EU announced after talks in June that they aimed to resolve the issue by the end of 2021. The tariffs up for discussion are EU-specific and the issue of excess capacity will be dealt with as well, according to the United States-European Union summit statement issued on June 15.
The American Iron and Steel Institute (AISI) and Steel Manufacturers Association (SMA), which represent US steelmakers, expressed optimism that the Biden administration would take the industry’s concerns about overcapacity and subsidies into account as it negotiates a resolution to the dispute.
“Since the US-EU summit in June and the agreement to work toward a resolution of differences on measures regarding steel before the end of the year, the American steel industry has been engaging closely with the US government to provide input on key issues from the industry’s perspective,” AISI president and chief executive officer Kevin Dempsey told Fastmarkets.
“How quickly a resolution of differences with the EU can be reached will depend on the degree of progress achieved in identifying effective and enforceable means of addressing global overcapacity in steel, which continues to threaten our industry and our national security. Among other things, this requires commitments to eliminate subsidies and other forms of market-distorting government intervention in the steel industry around the world,” Dempsey added.
“SMA is pleased to see this expedited negotiation timeline and encourage both sides to remain focused on developing a solution that is long- term, sustainable, transparent, easy to monitor and enforceable over time,” SMA president Philip K Bell told Fastmarkets. “At its core, any agreement must help ensure the viability of the American steel industry while bolstering American jobs. We hope to see mechanisms put in place that provide the flexibility in dealing with changes in steel demand.”
On May 17 the EU announced that it would delay plans to escalate retaliatory tariffs on US products, which were set to take effect on June 1 unless the US removed its 232 tariffs.
“Cooperating with our allies has made for many positive returns,” American Metals Supply Chain Institute (AMSCI) president Richard Chriss told Fastmarkets. “Tariffs, however, beget tariffs, including retaliatory tariffs from the European Union. The EU’s current moratorium on its retaliatory tariffs imposed as a result of the 232 steel and aluminum tariffs expires December 1. In many important respects, trade policy is foreign policy. Maintaining unwarranted tariffs on a key ally is the definition of bad foreign policy.”
AMSCI, which represents the interests of metal importers, has spearheaded efforts to rescind Section 232 since it was announced.
“About 300 manufacturing companies wrote President Biden in May this year, protesting that they can’t find the metal materials at sustainable prices they require for their operations, with American manufacturers paying 40% more than their European counterparts for similar steel,” Chriss said. “A 2019 Federal Reserve study estimated that higher US steel prices cost 75,000 Americans their jobs, a far greater loss than the small, transient increase in steel and iron mill employment attributed to the tariffs”.
Following the implementation of the Section 232 tariffs in June 2018, Fastmarkets’ daily steel hot-rolled coil index, fob mill US surged to $45.84 per hundredweight ($916.80 per short ton) - a nearly 10-year high at the time. The index was last calculated at $94 per cwt on Thursday and hit an all-time high of $94.03 per cwt on July 29.
Domestic production and limited imports will not be able to meet US steel demand this year, a West Coast buyer told Fastmarkets.
“The EU target for November 1 Section 232 elimination cannot come fast enough,” the West Coast buyer said.
“Recognizing that successfully addressing these significant challenges will take considerable time and effort, the US must at the same time maintain strong and effective trade measures to prevent surges in steel imports from every region of the world, including Europe,” Dempsey said. “We appreciate the Biden administration’s ongoing commitment to ensure the long-term viability of the American steel industry while addressing the problem of global excess steel capacity.”
Rijuta Dey Bera in New York contributed to this report.
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Reports that the United States and European Union plan to resolve the dispute arising from the Trump administration’s Section 232 steel and aluminium tariffs by November 1 have elicited mostly positive comments from steel market participants.