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

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

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

In a joint statement with the Biden administration, Brussels stated 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 disputes that have occurred since 2018. Since former President Donald Trump imposed tariffs on aluminum and steel in Europe and other economies, the EU needs to take these measures for national security reasons.

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

Monday’s move comes 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. Valdis Dombrovskis, Executive Vice President of the European Commission, said that the decision to suspend the automatic increase of retaliatory tariffs indicates that the EU is taking steps to “restart transatlantic relations.”

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

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.”

“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 at the beginning of 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 came to power in January, the European Union and the United States are “very actively” working to resolve trade disputes.

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