US seeks exemption from EU's CBAM to resolve the tariff dispute

As part of the United States administration's effort to exempt aluminium and steel exports from the carbon border levy (CBAM), a broader metal accord may be complicated by the allies imposing tariffs and retaliatory measures on each other's goods that could result in billions of dollars in tariffs and retaliatory measures.

However, according to our source from North America, it's implausible that the EU will accord to the American request since the bloc's legislation has yet to permit this type of provision readily. Such a move would likely violate World Trade Organization (WTO) rules.

After agreeing to temporarily suspend tariffs imposed by former President Donald Trump on national security grounds, the White House and the EU are working on a global agreement on sustainable aluminium and steel known as the GSA. Tariffs on more than $10 billion in EU and US exports could be reinstated if an agreement is not reached by October 2023.

European Commission Spokeswoman Miriam Garcia Ferrer said that the US isn’t incurring any costs related to the carbon border adjustment mechanism since those are borne internally in the EU.

Miriam Garcia Ferrer, the European Commission Spokeswoman, said, "The US isn't incurring any costs related to the carbon border adjustment mechanism since those are borne internally in the EU."

"Such an exemption would also constitute a breach of WTO rules (most favoured nation rule) if CBAM were not to apply to the US aluminium and steel sectors covered by the GSA."

Ursula von der Leyen, the European Commission President and the US President Joe Biden, said in a joint statement, "We were committed to achieving an ambitious outcome in the GSA by October 2023."

"The arrangement will ensure the long-term viability of our industries, encourage low-carbon intensity steel and aluminium production and trade, and restore market-oriented conditions globally and bilaterally. Together, we will incentivize emission reductions in these carbon-intensive sectors."