The UK Left Out of Biden’s Deal to End Tariffs on EU Steel Imports
President Biden has signed an agreement that will eliminate tariffs on EU steel imports, which is likely to reduce tensions between the US and the union. However, the UK has been left out of the accord. Come read our blog to see how this may affect the UK's steel sector.
In response to former President Donald Trump's tariffs on EU steel imports, the European Union (EU) imposed tariffs on various US products, including Harley-Davidsons, igniting a trade war that has raged since 2018. Now, President Biden has signed a deal that will end tariffs on imports of EU steel, which is expected to diffuse the situation. The UK, however, has been left out of the deal.
The EU Will Be More Competitive in the US Market
For three years, tariffs have been imposed on steel imports into the US from the EU (including the UK). In a move to recover the relationship between the US and the union, President Biden has removed tariffs on steel, which resulted in steel exports from the UK to the US falling by 50% since 2018.
The abolishment of the harsh tariffs, however, has not been applied to the UK, which UK Steel said the country desperately needed. Given that the US is the second-largest market for British steel exports, the country urgently needs relief from tariffs imposed on US-bound exports to ensure the future of the industry. As long as the tariffs remain in place, EU steel manufacturers will have a significant competitive advantage in the US over the UK.
The agreement comes just months after the safeguards that were put in place in 2018 to protect the British steel industry from an influx of cheap foreign exports expired. The UK’s Trade Remedies Authority (TRA) recommended to the British Secretary of State for Trade that it would be advisable to extend the safeguard measures for a further three years to protect the UK steel industry. However, a decision has yet to be reached.
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A Deal Aimed at Addressing Carbon Emissions from the Steel Industry
Steel manufacturing is one of the most emission-intensive activities in the world, with around 1.85 tonnes of carbon dioxide released into the atmosphere for every 1 tonne of steel produced. The 2 billion tonnes of steel produced globally each year are attributed to 8% of total carbon emissions. If steel production were a country, it would be the world's 5th largest carbon emitter.
To address this issue, the US aims to move away from imports of “dirty” steel, produced in countries where steel production contributes as much as one-fifth of the nation’s entire carbon emissions. China is one such producer of dirty steel.
The new agreement between the US and the EU seeks to reduce the reliance on “dirty” steel in order to take a small step towards reducing the emissions of the industry. Additionally, the agreement aims to reduce the amount of steel being dumped in both the US and EU markets, leading to steel oversupply. While the agreement will help EU steel producers, it will likely threaten UK producers. The UK may have to look to other markets to secure its future if it cannot strike a similar deal with the US. This challenge is just one of many trade barriers the UK is facing following its exit from the union.
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