The announcement that President Joe Biden would lift steel and aluminum tariffs on the European Union represented the easing of one of former President Donald Trump’s most infamous foreign policy moves.
In turn, the EU agreed to end its retaliatory levies, putting an end to a dispute that began in 2018 and was being litigated before the World Trade Organization.
But a closer look at the numbers may tell a different story — the United States and Europe are now getting along better, but Trump’s trade tariffs aren’t going away anytime soon.
BIDEN LIFTS TRUMP EU STEEL AND ALUMINUM TARIFFS, SHAKES HANDS WITH ERDOGAN AT G-20
“The overall system is here to stay,” said Tom Lee, a data and policy analyst at the American Action Forum, a conservative think tank based in Washington, D.C.
That’s because the 25% tariff on steel and 10% tariff on aluminum remains in place once a certain amount of each has been imported, in what’s known as a tariff-rate quota. Before Trump, those limits didn’t exist.
“If steel and aluminum imports surge, the tariffs come right back into place,” said Lee. “I don’t see this as a huge rescinding of tariffs. The key takeaway is the improved relations between the U.S. and the EU.”
That’s because tariffs remain politically sensitive, Lee added, especially in states such as Pennsylvania and Ohio where Biden needed to be seen as protecting the U.S. steel and aluminum industries. Biden promised the arrangement would create “good-paying union jobs,” and United Steelworkers President Tom Conway praised the deal in a statement.
“Under this arrangement, the United States will allow a basic overall level of steel imports, which will measure less than those that came from the EU in 2017 and 2018,” Conway said. “The deal creates certainty both for domestic producers of steel and users who are unable to find domestic supplies.”
The remaining tariffs could still be a drag on the international steel trade, especially if continued port delays make it difficult to predict exactly when a quota may be reached.
Trump’s various China tariffs remain in place, meaning the U.S.-EU announcement represents a relatively minor turn in America’s tariff policies rather than a sea change. Despite considerable blowback when the tariffs were first announced, the Biden administration keeping many of them indicates a major overlap with Trump regarding the policy.
“Biden has taken on worker-centric trade and supply chain policies that in practice aren’t so different from the protectionist trade policies of President Trump,” Lee said.
Trump himself doesn’t hold this view. “The Democrat politicians of this Country spend 99% of their time fighting Republicans and no time thinking about making our Country great,” he said in a statement on Friday. “If they would spend half of that energy fighting China, Russia, Iran and even the European Union, where the U.S. just dropped all tariffs, we would go back to greatness again.”
The U.S. and EU have pledged to negotiate a carbon-based steel and aluminum trade agreement, but that won’t be completed until 2024.
The biggest takeaway may be the two entities reestablishing friendly ties in the face of competition from China. EU President Ursula von der Leyen described the deal as “ushering in a new era of trans-Atlantic cooperation.” The pair have also concluded the 17-year Boeing-Airbus saga and formed the U.S-EU Trade and Technology Council.
Europe is lifting completely its retaliatory tariffs on a range of American products, from Harley-Davidson motorcycles to Kentucky bourbon and Levi’s jeans. This should be a big boost to those companies, especially since the longer the tariffs remained in place, the more Europeans would get out of the habit of buying their products.
“If suppliers get locked into long-term contracts, it’s really hard to get those customers back,” said Jennifer Hillman, senior fellow for trade and international political economy at the New York-based Council on Foreign Relations.
Noting that Europe waived all of its tariffs while the U.S. kept some in place, Hillman thinks EU leaders may be looking toward future deals.
“Part of what Europe got is an ability to work with the U.S. finding common ground on the idea of a carbon border adjustment,” Hillman said. “For many in Europe, that’s really important. They think it’s the only way we’ll get serious about climate change.”
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
The deal aims to incentivize emission reductions, restricting so-called “dirty steel” shipped from other countries or sometimes sent to the EU to be lightly retouched and branded European. Steel now must be both melted and poured in Europe to qualify.
“With respect to the China tariffs, there’s no question that the basic line coming from the Biden administration is, ‘Stay the course, leave in place all of the Trump tariffs,'” Hillman said. “The only difference in policy is that the Biden administration is indicating it wants to work more with allies than with China.”
