EU, US Aim to Lift Section 232 Tariffs and Retaliatory Measures by Year's End

After the European Union announced May 17 that it will not double retaliatory tariffs on U.S. exports on June 1, exporters expressed relief. More significantly, the joint statement between the EU and Office of the U.S Trade Representative said the two sides are aiming for a united approach to global overcapacity distortions that would allow the 25% and 10% tariffs under Section 232 to be removed at the end of the year. Domestic metal producers welcomed that news, but the union that represents steelworkers reacted with some alarm.

Distilled Spirits Council CEO Chris Swonger said, “Distillers across the United States are breathing a huge sigh of relief after bracing for a 50% tariff on American Whiskeys in just a matter of days that would have forced many craft distillers out of the EU market. We recognize there is still work to be done to get EU and U.S. spirits back to zero for zero tariffs. We greatly appreciate the Biden administration’s ongoing efforts to resolve these longstanding trade disputes and reduce the economic pain felt by those industries unfairly caught in the middle.”

The CEO of Harley-Davidson said the announcement that tariffs affecting its motorcycles will stay at 31% rather than going to 56% is “the first step in the right direction,” but said the company will continue to fight in court a recent Binding Origin Information decision in the EU that said that Thai-made motorcycles deserve the 25% retaliatory tariff, because Harley moved production from Wisconsin to Thailand to avoid the punishing tariff.

The Aluminum Association never supported 10% tariffs on imported aluminum, and its CEO Tom Dobbins said, “We look forward to supporting this process and are hopeful that the ultimate outcome will both address global aluminum overcapacity and help normalize the U.S.-EU trading relationship.”

The American Iron and Steel Institute, in contrast, thinks the 25% tariffs are an important protection for its members, but its top official expressed hope that the European Union could coordinate with the U.S. on “substantive solutions to the global overcapacity crisis in steel while maintaining the necessary trade measures to prevent surges in steel imports that could quickly undermine the U.S. industry and our national security.”

But the United Steelworkers responded with a hackles-up statement. They thanked the administration for listening to them, but added, “We cannot support any approaches that do not provide measurable positive results. The EU is an important ally, but in the past, it has been part of the problem, not part of the solution.”