It's not entirely clear how close the two sides actually are to finally ending Trump's trade war with Europe, but American officials headed to Brussels next week are taking a new proposal with them.
According to Bloomberg, the Biden administration's trade representative Katherine Tai will offer to lift tariffs on European metal under a higher threshold than previously proposed. This would allow most imports to escape tariffs.
The proposal is apparently designed to both end the war and appease labor unions.
The updated proposal involves so-called tariff-rate quotas that Bloomberg reported last month, but provides for a bigger quantity of steel to enter the U.S. before higher duties kick in, according to two of the people who asked not to be identified because the discussions are private. TRQs allow countries to export specified quantities of a product to other nations at lower duty rates, but subjects shipments above a pre-determined threshold to a higher tariffs. [...]
U.S. steelmakers and workers generally support some sort of tariff-rate quota, with the head of the United Steelworkers, Tom Conway, saying in June he would support such a move.
Since the tariffs started in 2018, U.S.’s steel mills have been producing at their highest levels since the Great Recession, and their owners are on track to book their fattest profits yet, thanks to record high prices.
Higher prices have been good for rich individuals who actually own commodities and futures in metal, but not so much for the rest of us.
With a breakdown in supply chains threatening the entire global economy at this point, I would not be surprised to see a tentative deal to finally end Trump's trade war with Europe announced in the very near future.
Sources who spoke to Bloomberg say the US and EU are still far apart, but we literally can't afford to fight trade wars on multiple fronts and I suspect the breakdown in supplies is why the Biden administration is also moving forward to unwind Trump's trade war with China. Our trade deficits are surging because of higher prices and Trump's tariffs are contributing to higher prices beyond what we would experience under the disruption to supply chains alone.
This is not directly related to the cost of metal, but to some extent it is. The price of beef at my grocery has literally doubled and one factor contributing to the higher cost is a shortage of farm equipment and the metal that goes into it.
New Ag Supply in Kansas is pleading with customers to order parts now for spring planting. And in Iowa, farmer Cordt Holub is locking up his machinery inside his barn each night, after thieves stole hard-to-find tractor parts from a local Deere & Co dealership.
Farmers say they are scrambling to find workarounds when their machinery breaks, tracking down local welders and mechanics. Growers looking to buy tractors and combines online are asking for close-up photos of the machine's tires, because replacements are expensive and difficult to find, said Greg Peterson, founder of the Machinery Pete website which hosts farm equipment auctions.