General

Recently, the sixteenth summit of G20 leaders held in Rome ended. One thing that attracted attention at this summit was that the United States and the European Union announced the end of the steel and aluminum tariff dispute that began in 2018, and stated that they will develop a global arrangement for sustainable steel and aluminum in the next two years.

The United States and the European Union jointly stated that the two sides have taken measures to re-establish the flow of transatlantic steel and aluminum trade and to respond to the challenges faced by the industry.

But things are far from as simple as they seem. Recently, there has been new news from the United States, which seems to want to take further measures.

U.S. stops punitive tariffs to the EU

In the previous G20 group summit, the United States and the European Union countries have communicated and reached an agreement on the tariff issue between the two sides to a certain extent, which also means that the overall relationship between Europe and the United States can be eased.

Moreover, the European Union and the United States have issued clear statements. The United States stated that the levy of additional tariffs on steel and aluminum products imported from the European Union will be stopped.

Three years ago, the Trump administration imposed additional tariffs of 25% and 10% on steel and aluminum products imported from the European Union. This measure was cancelled by the Biden administration of the United States.

U.S. Secretary of Commerce Gina Raimondo said that the truce between the U.S. and the EU on metal tariffs will help offset the inflation of U.S. goods.

At the same time, the agreement reached by the two parties emphasizes that the EU will be able to export a full three million tons of steel to the United States in a duty-free manner each year. At the same time, its annual duty-free quota can be increased by one million tons.

This agreement has also been unanimously approved by the United States and Europe. But it is precisely because of this agreement that the interests of American workers themselves have been affected, and this situation may also cause problems for the Biden administration.

The EU responded positively and the US spoke

In response, the EU responded positively. Raimondo, who attended the G20 summit, said that the European Union’s retaliatory measures against American iconic products such as Harley-Davidson motorcycles, Levi’s blue jeans and Kentucky Bourbon whiskey will no longer be implemented and will start from December this year. Starting on the 1st, tariffs on various products will be reduced by a full 50%.

EU Trade Commissioner Valdis Donbrowskis said on Twitter: "We have agreed with the United States to suspend our trade disputes on steel and aluminum products, and to initiate a global agreement on sustainable steel and aluminum. Cooperation."

In response to this situation, the Biden administration clearly expressed its full affirmation. Not only that, but US government officials also emphasized that after this, it also means that the biggest obstacle to the continued development of bilateral relations between Europe and the United States has been eliminated, and the diplomatic relations between the two sides can be further consolidated.

There is nothing wrong with consolidating diplomatic relations for the common good, but the subsequent remarks made by US Trade Representative Dai Qi are somewhat intriguing.

Dai Qi said that after the EU and the United States have reached a new agreement, steel and aluminum products from other countries such as China will not be able to enter the US market and will be immune to the impact of competition from China and other countries.

Such a speech also revealed a very clear signal, because now the US government chooses to reduce tariffs on steel and aluminum products imported from the EU, the main purpose is to temporarily stop the competition and differences with the EU.

He then focused his attention on China and took further actions to suppress and restrict it. Such a situation is also quite favorable for Europe, and it is also very happy to see it.

China's crude steel production is the largest in the world

Why should the United States join forces with the European Union to target China?

It is to contain China on steel and prevent China from being "stuck". Because China has recently restricted the production of steel products to achieve the goal of carbon neutrality, this has directly caused the US steel products to skyrocket by more than 200% in one year.

Therefore, this time the United States has joined the European Union and wants to use the European Union to make up for the gap in China's reduction in production. But is China's steel market really so crowded out? Can the EU be able to eat the US market?

You know, China's crude steel output accounts for more than half of the global output. Many countries rely heavily on China's steel materials and need to import a large number of products from China every year. The United States is naturally one of them.

According to the latest data from the World Steel Association, in September 2021, the crude steel output of 64 countries and regions included in the World Steel Association's statistics was 144.4 million tons.

Among them, China's crude steel output is 73.8 million tons, the US crude steel output is 7.3 million tons, and the US crude steel output is less than one-tenth of China's.

Even if the EU's steel is added, it is estimated that it is hard to make up for the shortfall. You must know that before the US imposes EU steel tariffs, the total amount of EU steel and aluminum products exported to the United States was only 5 million tons.