The EU and US are welding a steel deal back together

US and EU officials are attempting to resolve their long-running steel dispute by agreeing to impose tough new green criteria on Chinese steel.

What’s the backstory? In 2018, Washington imposed extensive tariffs on imported steel and aluminium, arguing on national security grounds that US industry had to be protected from unfair competition:

  • China’s subsidies for its own producers had led to an oversupply, and
  • This drove global steel prices down, harming suppliers elsewhere

Why steel and aluminium? It’s a core input for housing, infrastructure, defence, and manufacturing; all sectors closely linked to national power.

Brussels quickly retaliated against the US tariffs, and the two sides then agreed in 2021 to try and settle their dispute by 31 October of this year.

Which brings us to the deal under discussion. It aims to slap tariffs on:

  • steel that’s benefited from non-market practices (like subsidies), and
  • ‘dirty steel’ (ie, steel produced with high carbon emissions).

Both these criteria would impact China’s steel industry. But the US and EU are struggling to agree on some basics: how to define dirty steel, which tools to use (the EU likes carbon pricing), and how to comply with WTO rules.

If they can’t agree by the end of October, billions in US tariffs and EU retaliatory measures could snap back into place.

Intrigue’s take: In diplomacy, trade is one of those areas where everyone plays hardball, even among the closest of allies. Why? The impacts back home are so tangible: jobs, businesses, farms, factories, towns, elections…

But steel is particularly tricky. Tensions have been around for years: JFK had a very public spat with the US steel sector in 1962. And the stakes are high: the EU itself emerged from a steel pact that was aimed at avoiding another war.

Word on the street is these talks aren’t going to plan. And elections next year in both the US and the EU will only make the negotiations tougher.

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