Any agreement needs to include mechanisms that will prevent surges in European shipments to the US, the USW, the American Iron and Steel Institute (AISI) and the Steel Manufacturers Association (SMA) wrote in a letter to President Joe Biden on Friday September 3.

The measures need to be implemented on a product- and country-specific basis and allow for tough tariffs that will automatically be imposed if steel imports from the EU reach a level that injures US producers, according to the letter.

“We remain optimistic that the negotiations will result in a workable solution with the EU,” SMA president Philip K Bell told Fastmarkets. “Any [Section] 232 alternative must prevent import surges, eliminate exclusions and have quantitative metrics to ensure long-term success. The solution must also take into account individual products that require special consideration.”

The EU is suggesting that the US impose tariff-rate quotas on steel and aluminium imports from the trading bloc to resolve the dispute, sources told Fastmarkets on September 7. The shift to tariff-rate quotas is not the only solution under consideration, sources said.  

“We want to make sure that there is a mechanism that will deal with each product and country,” AISI president and chief executive officer Kevin Dempsey told Fastmarkets. Tariff-rate quotas could “prevent a surge of imports and allow for an increase of flexibility.”

The authors of the letter expressed concern about subsidies and other unfair competition practices that they claim European countries engage in. Among the issues that will have to be dealt with is European mills' use of substrate from a number of non-EU countries, according to the letter.

“Some European steelmakers use semi-finished steel from China, Russia and elsewhere, and that shouldn’t be counted as EU steel,” Dempsey said. 

The former Trump administration in March 2018 announced the imposition of tariffs on steel and aluminium imports on national security grounds effective June 1. The EU imposed retaliatory tariffs against on array of US products in 2018.

While the EU was scheduled to double the duties on June 1, it announced on May 17 that it would delay plans to escalate the tariffs while negotiations continued. The US and EU aim to resolve the issue by November 1.

“We also believe it is essential that these talks serve as a catalyst for serious discussions about decarbonization as well as EU subsidies that continue to prop up inefficient steelmakers and add to global excess capacity,” Bell said. 

US hot-rolled coil prices surged following enactment of the Section 232 tariffs in June 2018, reaching a nearly 10-year high of $45.84 per hundredweight ($916.80 per short ton) on July 5.

Fastmarkets’ daily steel HRC index, fob mill US was last calculated at $96.99 per cwt on September 7 after hitting an all-time high of $97.33 per cwt on September 3.

“The SMA applauds the work of the negotiation teams at the Department of Commerce and the Office of the United States Trade Representative,” Bell said. “We will continue to work with them and support their efforts."

Maria Tanatar in London contributed to this report.