UK and US sit down to resolve Trump-era trade dispute

As an example of how trade disputes often have little to do with trade, the announcement this week that the US and UK would sit down for talks to resolve the EU’s ‘trade dispute’ Trump era on steel and aluminum tariffs is an example.

In March 2018, when the former US president first imposed Section 232 import duties of 25% on steel and 10% on aluminum imported from almost anywhere, the Kingdom United belonged to EU. Although the demand seemed heavy, there was a strong case for action. Capacity utilization in the US steel industry had fallen to record lows and the industry as a whole had struggled to make a decent return since the financial crisis. But late last year, the EU successfully negotiated the removal of tariffs in return for a quota deal with the United States.

The UK and Europe no longer exist

The United Kingdom, however, left the EU on January 1, 2021 and therefore could not take advantage of this agreement. In fact, to make matters worse, the clauses of the US-EU deal make trade between the UK and the EU more difficult, because the US-EU deal stipulates that steel originating in UK will still be subject to customs duties even if worked and exported by EU companies. This has the effect of making its use in components destined for the US unprofitable for EU manufacturers.

Where does the UK rank?

Understandably, US steel producers remain opposed to any deal. And, similarly for Japan, with which the United States has opened parallel discussions, the industry no doubt has cause for concern. Japan ranked 5and in 2020 among suppliers to the U.S. steel market at just under $1 billion according to Statista.com. However, the UK is not even in the top ten. Nor does it qualify as a country that does not support free and fair trade or as a country that has lax environmental legislation. These two arguments do not justify the easing of imports from countries like China. What the UK has involves a thorny unresolved issue with the EU in particular, Northern Ireland, and its trade deal with EU member Ireland.

Perhaps because the current president claims distant Irish ancestry, or perhaps as a concession to the EU, the current Biden administration has heightened tensions in the province over resolving border issues. In addition, the administration has used issues such as steel and aluminum tariffs 232 as leverage which it says gives it leverage in EU-UK negotiations. In the meantime, the UK countervailing measures are penalizing US exports of various products, some like whiskey producers have seen their volumes plummet, others like Harley Davidson have seen their profits vanish.

Too many jobs hang in the balance and the future of business hangs in the balance for politicians to play games with trade. The UK’s demand for equal treatment to its European neighbors should determine whether any additional tonnes from the UK pose a serious threat to US producers. It’s hard to see how this stacks up with EU industry ten times the size, but that’s the measure.

By AG Metal Miner

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