US and EU Outline Trade Framework Following Section 232 Tariff Cancellation

According to a joint statement released by the two government agencies, US tariffs on steel and aluminum exports to members of the European Union could be lifted by the end of the year.

“We are committed to ensuring that this structure works to ensure a level playing field, overcome long-standing differences, avoid future litigation and more effectively address the challenges posed by non-market economies,” the joint statement said. "We will be engaged in discussions to resolve existing disagreements on measures regarding steel and aluminum by the end of the year."

Details on exactly how the new tariff structure will look like are lacking. However, EU reciprocal tariffs resulting from the introduction of section 232 tariffs in 2018 will certainly be considered.

Any new tariff scheme will also take into account excess capacity - and not necessarily just excess capacity arising in the US or the EU. In addition, the issues of transatlantic taxation will be resolved.

“We are committed to ensuring the long-term viability of our steel and aluminum industries and eliminating excess capacity,” the statement said. “We are determined to promote a fair, sustainable and modern international tax system and work together to achieve a global consensus on the taxation of multinational companies through the G20 /OECD Inclusive Framework and look forward to reaching agreement at the July meeting of G20 Finance Ministers and Central Bank Governors.”

While some market sources - notably the American Iron and Steel Institute - support the spirit of this announcement, local market sources remain skeptical about how well US-EU cooperation will address the overcapacity problem overwhelmingly emanating from Asia.