President Joe Biden said on Sunday that a new US-EU trade agreement would crack down on “dirty steel,” which emits carbon emissions blamed for climate change, as well as heal a trans-Atlantic schism caused by Trump-era steel and aluminum tariffs.
During a joint appearance at the Group of 20 summit, Biden and European Commission President Ursula von der Leyen stated that the agreement represented a renewed partnership on economic and environmental issues.
The trade agreement would address excess capacity, which can distort the steel market, and would establish a framework for reducing the carbon intensity of steel and aluminum production, which contributes to global warming. The US president stated that “dirty steel” made in China would be barred from entering their markets, though the agreement could be signed by any like-minded country.
“By leveraging our diplomatic and economic power, we can reject the false notion that we can’t grow our economy and support American workers while addressing the climate crisis,” said Biden, who has been urging the United States to address the threat posed by climate change aggressively. This week, Biden will also attend a major United Nations climate conference in Glasgow, Scotland. As they discussed the deal, Von der Leyen kept smiling at Biden and calling him “dear Joe,” an apparent sign that the US president had made progress in repairing relations with Europe after the partnership suffered during the Trump years.
“It will be a significant step forward in achieving climate neutrality and ensuring a level playing field,” she said, adding that the agreement was part of a renewed, forward-thinking agenda with the US.
The agreement was first announced in Rome on Saturday by US National Security Advisor Jake Sullivan, US Trade Representative Katherine Tai, and US Commerce Secretary Gina Raimondo. They stated that the so-called Article 232 tariffs would not be completely eliminated, but that some European steel and aluminum would be allowed to enter the United States duty-free.
In exchange for Europe dropping its retaliatory tariffs, the United States would also ensure that “all steel entering the United States via Europe is produced entirely in Europe,” Raimondo said.
Tariff reductions are a critical step in undoing one of Donald Trump’s presidential legacies, as Biden attempts to re-establish U.S. relations with Europe.
In 2018, the Trump administration, imposed tariffs on EU steel and aluminum, claiming that foreign products made by American allies posed a threat to US national security. Europeans and other allies were outraged by Trump’s use of the Article 232 section of US trade law to justify the tariffs, prompting many to levy counter-tariffs on American-made motorcycles, bourbon, peanut butter, jeans, and hundreds of other items.
The back-and-forth harmed European producers while raising steel prices for American firms. Trump’s stated goal of creating jobs at steel mills was also not met by the tariffs. According to the Bureau of Labor Statistics, jobs in primary metals manufacturing increased slightly in 2019, reaching 389,100. However, due to the pandemic, mills laid off workers, and employment in the sector is roughly half of what it was in 1990. In May, the European Union took steps to improve relations. The EU temporarily halted planned tariff increases on some retaliatory tariffs. This meant that American whiskey faced a 25% tax in Europe, rather than the planned 50% tax. To avoid the higher tax rate, both parties had a December deadline.
The summit’s host, Italian Prime Minister Mario Draghi, expressed “great satisfaction” with the tariff agreement in a statement Saturday night. The decision “confirms the ongoing strengthening of already close trans-Atlantic relations and the progressive overcoming of protectionism in recent years,” he said. After “three very difficult years of sagging American whiskey exports,” Chris Swonger, president and CEO of the Distilled Spirits Council of the United States, welcomed the announcement.
“Lifting this tariff burden on American whiskeys not only benefits US distillers and farmers, but it also aids the recovery of EU restaurants, bars, and distilleries hit hard by the pandemic,” Swonger explained.