Trade

Biden Ends Trump’s Trade War With Europe

SK Ashby
Written by SK Ashby

As expected, President Biden will not be returning home from Europe without a deal in his hands.

A deadline of today to either end or escalate Trump's trade war did not leave then much other choice, but the president announced yesterday that he had reached a deal with European officials to lift American tariffs on metal and Europe's corresponding retaliatory tariffs on American goods.

What was somewhat unexpected was the inclusion of aluminum under the deal, not just steel.

The move immediately removes tariffs on the European Union on a range of US products that were put in place by former President Donald Trump. Biden said the move would lower costs for American consumers, strengthen the US steel industry and create good-paying union jobs.

As part of the deal, the US and the EU announced their commitment to negotiating a carbon-based sectoral arrangement on steel and aluminum trade by 2024. The President said the agreement would "incentivize emission reductions in one of the most carbon-intense sectors of the global economy."

They also committed to working to restrict access to their markets for dirty steel -- steel that has another material along with it -- from countries like China. They will also limit access to countries that dump steel in their markets, which Biden said harms workers, the industry and the environment.

There is one big exception to this good news and while I can't necessarily say it's funny, I'd be lying if I said I wasn't amused.

President Biden's deal is with the European Union's trading bloc and, as you know, Britain is no longer a member of the trading bloc and tariffs on exports of British metal will still apply.

Trade body UK Steel said a deal for British producers was "sorely needed".

The tariffs, which came into force in 2018, nearly halved British steel exports to the US, Gareth Stace, director general of UK Steel, said.

The US is the second-largest market for British-made steel. But the new deal will put UK producers at a competitive disadvantage compared to European rivals who will be able to ship their products to the US without paying import taxes.

Who remembers when Prime Minister Boris Johnson said a trade deal with the U.S. could make up for losing free access to the European market?

The Biden administration previously removed Trump's tariffs on other European goods that he imposed in response to the 16-year-old dispute over subsidies for Airbus. The administration is no longer threatening to impose tariffs on European goods in response to taxes on digital services and removing the tariffs on metal means Trump's trade war is effectively over now. It's history.