EU and US freeze mutual tariffs and strengthen their alliance

The president of the European Commission (EC), Ursula Von der Leyen, and the president of the United States, Joe Biden, celebrated Sunday in Rome the agreement to suspend mutual tariffs imposed under the administration of Donald Trump, a "big step in bilateral relations", which strengthens the alliance and allows both to fight "against climate change".

"The US will not apply the tariffs of section 232 (of the Trade Expansion Act) and will allow tariff-free imports of steel and aluminum from the EU in a historic volume" -whose amount was not detailed, although the specialized press shuffles 3.3 million tons-; while the EU "will suspend related tariffs on US products," the White House reported in a note.

"Following this decision by the United States, I am pleased to announce that the Commission will propose to suspend the tariffs that we had introduced," said Von der Leyen, during an appearance at the G20 leaders' summit with the U.S. president.

Biden, for his part, stressed that the agreement helps "restore transatlantic trade flows" and addresses shared climate change challenges, while ensuring a strong and competitive U.S. steel industry for decades to come and creating jobs.

"We can throw out the idea that we can't grow our economy and support American workers while addressing the climate crisis. We can do all three," he argued.

The EU-US trade relationship deteriorated under US President Donald Trump (2017-2021), in particular following the imposition in 2018 of tariffs of 25% on EU steel imports and 10% on aluminum imports, to which the EU responded with its own batch on several US products, including bourbon whiskey, peanut butter, cranberries or orange juice.

Now, the Biden administration is restoring the close relationship with its European partners and a further sign of this is this "historic" pact, as he himself described it.

In fact, Von der Leyen stressed that since Biden's arrival at the White House, "trust and communication" between Brussels and Washington have been restored and recalled that agreements have been reached to eliminate tariffs arising from the dispute over subsidies to Boeing and Airbus, a global minimum corporate tax has been agreed and a Trade and Technology Council has been set up, a forum for Brussels and Washington to coordinate on issues such as trade, the economy and technology.

The pact now announced will allow the two to negotiate a new global trade agreement to address global overcapacity in steel and aluminum coming mainly from China, which in recent times has traded its cheap steel on international markets, directing it to countries such as the US, via Europe, something that Washington believes penalized the competitiveness of its industry.

From now on, steel entering the US through Europe must have been produced entirely in Europe, a rule known as "cast and poured".

But in addition, environmental protection will be promoted because, the White House said, "U.S.-made steel and aluminum are produced with far fewer emissions than dirtier alternatives made in the People's Republic of China and elsewhere."

"To date, U.S. steel companies and American workers have received no benefit from their low-carbon production. Low-carbon steel in all types of production, and the workers who make it, will be incentivized and rewarded in the future," he said.

And a technical working group will be set up to share relevant data and develop a common methodology for assessing the integrated emissions of traded steel and aluminum.

"The global agreement will be open to any interested country that shares our commitment to achieving the goals of restoring market orientation and reducing trade in carbon-intensive steel and aluminum products," the U.S. government said in its statement.

Von der Leyen also confirmed that the complaint that the EU club had filed against Washington before the World Trade Organization (WTO) as a result of the U.S. tariffs on aluminum and steel will be put on hold.