On October 30, 2021, the United States and the European Union (EU) reached an agreement regarding the Section 232 tariffs on steel and aluminum imports from the EU that were implemented during the Trump administration. Under the agreement, the United States will replace the current Section 232 duties with tariff-rate quotas (TRQs) for covered EU products effective January 1, 2022. The EU will suspend related retaliatory tariffs on U.S. products, and the United States and EU have agreed to suspend their World Trade Organization (WTO) disputes against each other regarding these Section 232 tariffs.
Under the framework of the agreement, the United States will replace the existing tariffs on EU steel and aluminum products under Section 232 with TRQs. For steel, historically-based volumes of EU steel products will enter the U.S. market without the application of Section 232 tariffs as follows:
- The aggregate annual import volume under the TRQ is set at 3.3 MMT for 54 product categories and allocated on an EU member state basis in line with the 2015-2017 historical period. Section 232 steel products from the EU that are within the quota will enter free of any Section 232 duty, while all Section 232 steel products entering above the quota will continue to be subject to a Section 232 duty of 25 percent.
- Imports of derivative articles of steel will not be subject to Section 232 duties.
- In order to be eligible for Section 232 duty-free treatment under the quota, steel imports must be “melted and poured” in the EU according to current U.S. requirements.
- The United States will maintain its steel product exclusion process.
For aluminum, historically-based volumes of EU aluminum products will enter the U.S. market without the application of Section 232 tariffs as follows:
- The aggregate annual import volume under the TRQ is set at 18 thousand metric tons (TMT) for unwrought aluminum under two product categories and at 366 TMT for semi-finished (wrought) aluminum under 14 product categories. The import volumes will be allocated on an EU member state basis in line with the 2018-19 historical period, with the exception of foil (7607), where 2021 annualized data will be utilized. Section 232 aluminum products from the EU that are within the quota will enter free of any Section 232 duty, while all Section 232 aluminum products entering above the quota will continue to be subject to a Section 232 duty of 10 percent.
- Imports of derivative articles of aluminum will not be subject to Section 232 duties.
- An importer must provide a Certificate of Analysis for each aluminum product entered into the United States, as required by current U.S. law.
- The United States will maintain its aluminum product exclusion process.
Further details on the application of these TRQs and the 54 steel product categories and 14 aluminum product categories are available here.
In addition, under the agreement, the EU will ensure market-oriented conditions in its market through the application of safeguards and other appropriate measures. In particular, the EU will enhance its enforcement mechanisms “to prevent leakage of Chinese steel and aluminum into the U.S. market.” A White House fact sheet also noted that the United States and the EU would “negotiate the world’s first carbon-based sectoral arrangement on steel and aluminum trade by 2024.”
In a brief statement, U.S. Department of Commerce Secretary Gina Raimondo stated, ““We have secured a deal that will protect American jobs; avoid retaliatory tariffs on iconic American brands like Harley Davidson and the Kentucky bourbon industry; reduce inflationary pressures on products like cars, trucks, appliances and canned goods; and alleviate a major supply chain crunch by supporting increased steel and aluminum capacity in the U.S.” U.S. Trade Representative Katherine Tai added, “With this dispute behind us, we are in a stronger position to address global overcapacity from China with an enhanced enforcement mechanism to prevent leakage of Chinese steel and aluminum into the U.S. market.” Both parties have also agreed to expand coordination involving trade remedies and customs matters and to meet regularly to consult and develop additional actions to address non-market excess capacity in these sectors.