The parties continue negotiations on tariff quotas and the extension of the terms of the truce

The European Union is considering reopening a case in the World Trade Organization (WTO) against the United States over a dispute over tariffs on steel and aluminum imports during the Trump administration. The parties then imposed reciprocal duties on goods worth more than $10 billion, Bloomberg reports.

According to the sources, by reopening the WTO case, the EU will leave the door open for future tariffs, while extending the settlement that will avoid the return of duties on billions of dollars of exports early next year. Brussels has yet to make a final decision.

The trade dispute between the parties began under Trump, when duties were imposed on European steel and aluminum under Section 232, prompting the European Union to retaliate. In 2021, under the Biden administration, the parties reached a temporary truce and gave themselves a two-year deadline to reach an agreement on the Global Sustainable Steel and Aluminum Agreement (GSA), which was supposed to end mutual tariffs.

As part of these agreements, the United States partially eliminated Section 232 tariffs by introducing a set of tariff rate quotas (TRQs) that allowed the import of 3.3 million tons of European steel and 384 thousand tons of aluminum per year without import duties. The EU has frozen all its restrictive measures. According to the European Union, this created an unbalanced situation where the bloc’s exporters paid more than $350 million in duties per year.

Since the GSA negotiations have reached a deadlock, the parties are engaged in a dialogue on extending the terms of the truce. The US is seeking to extend the status quo after the US elections until the end of 2025. The EU is asking to replace the current TRQ system, which includes both dozens of quarterly quotas and steel categories, with annual quotas that better reflect historical trade flows.

According to sources, the Biden administration has so far rejected this request. However, many EU member states are reluctant to respond to this refusal by reimposing tariffs on some US goods, out of fear that this could help Trump in next year’s elections. However, the United States may still make some minor concessions.

According to Sam Lowe, a partner at Flint Global, an international consulting company, the EU might be able to get the US to improve its quota administration, but this would require delaying the process until the end of the year. At the same time, member states do not want tariffs to return.

As GMK Center reported earlier, the United States should make tariff quotas on steel imports from the EU much less stringent, assuming they are extended beyond the end of this year, said European Commission Vice President Valdis Dombrovskis.