The EU marks a US trade contraction by shelving planned tariff hikes

The EU has agreed to shelve plans to raise tariffs on a series of US products because both sides are seeking solutions to resolve the long-standing stalemate in the steel and aluminum industries.

Brussels said in a joint statement with the Biden administration that the European Union and the United States have agreed to avoid changes that “negatively affect bilateral trade” because they have begun discussions to resolve global overcapacity in these two sectors.

This means that the EU will no longer continue its original plan to impose tariffs on a series of US products early next month. Until the end of this year, both sides are committed to discussing the oversupply of steel caused by steel production in some countries, including China.

The EU’s move is related to the dispute that has occurred since 2018, when former President Donald Trump imposed tariffs on aluminum and steel from Europe and other economies, saying that these measures were needed for national security reasons.

The European Union has retaliated against the tariffs it intends to impose on a series of products, and plans to raise tariffs on June 1. In the first round, the EU cracked down on high-profile American products including bourbon, clothing and motorcycles.

Monday’s action took place before the planned summit between the European Union and US President Biden next month, which aims to improve transatlantic relations after Trump’s years of turmoil. European Commission Executive Vice President Valdis Dombrovskis (Valdis Dombrovskis) said that the decision to suspend the automatic increase of retaliatory tariffs shows that the EU is taking steps to “restart transatlantic relations.”

He declared a truce on Monday in a joint statement with U.S. Trade Representative Katherine Tai and Secretary of Commerce Gina Raimondo.

The two parties stated that they have agreed to discuss “steel and aluminum overcapacity and the deployment of effective solutions, including appropriate trade measures to protect our key industries.”

“In order to ensure the most constructive environment for these joint efforts, they agreed to avoid making changes on these issues that would adversely affect bilateral trade.”

Dombrowskis added: “By suspending our measures, we are creating space to resolve these issues before the end of this year.

“The EU is not a national security threat to the United States. However, the distortions (mainly driven by third parties) caused by global overcapacity pose a serious threat to the market-oriented EU and US steel and aluminum industries and workers in these industries.”

Dombrovskis earlier this month tell In the Financial Times, he also increasingly hopes to reach an agreement with the Biden administration to end the 16-year dispute between Airbus and Boeing.

He said that since Biden took office in January, the European Union and the United States are working “very actively” to resolve trade disputes, and he praised the “very welcome change.”