According to a recent report, the European Union and the United States mutually agreed to discuss and resolve trade disputes around aluminium and steel, which dates back to March 2018 when the former US President announced 10 per cent additional tariffs on aluminium and 25 per cent on steel imports originating from the EU. According to the European Commission, this represented €6.4 billion worth of trade.
As a counter tariff, the European Union also imposed extra duties on a list of US imports worth €2.8 billion. The targeted products included steel, aluminium, peanut butter, whiskey, motorcycles, and jeans. In June 2021, the EU was supposed to add further €3.6 billion tariffs on the US to fully offset the effects of the Trump tariffs but temporarily suspended to give dialogue a chance to succeed.
Leaders from both countries have vowed to work together to find effective solutions to trade disputes. Both sides of the Atlantic are determined to tackle the problem of excess capacity involving aluminium and steel, which is reportedly driven largely by third parties, mainly China, by far the world's largest producer of both materials.
Excess capacity occurs when demand is less than the amount a business can potentially supply. China has long been accused of this for piling up millions of tonnes of aluminium and steel that its domestic consumers don’t purchase.
As Chinese capacity grows and stocks mount, companies in Europe and the United States suffer from unfair competition, resulting in a depression of prices.
"The distortions that result from this excess capacity pose a serious threat to the market-oriented EU and US steel and aluminium industries and the workers in those industries," the three leaders said, adding they intend to partner up to "promote high standards, address shared concerns, and hold countries like China that support trade-distorting policies to account.”
According to a report, the US and EU want to find a long-term, viable solution before the end of 2021, which they expect will also strengthen their democratic alliance.
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