U.S. Avoids Trade War with EU by Ending Steel Tariffs

Under considerable pressure from both abroad and home to remove the tariffs, Bush said the duties of up to 30 percent on steel imports had served their purpose and the U.S. steel industry was now well positioned to compete globally.

Had the United States refused to eliminate the tariffs – deemed illegal last month by the World Trade Organization – the European Union was set to target U.S. goods with retaliatory duties of around $2.2 billion (€1.8 billion). But EU Trade Commission Pascal Lamy said Europe would now forego slapping tariffs on products like orange juice and farming equipment from states that will be important to Bush in next year's presidential election.

“This is good news for Europe,” Lamy said at a press conference in Brussels. “We will freeze our sanctions system that would have taken effect from the 15th of this month.”

Bush imposed the steel tariffs almost two years ago to allegedly protect U.S. producers from excessively cheap foreign steel imports. However, many politically observers believed the move was also aimed to shore up support in electorally-important steel states like West Virginia, Pennsylvania and Ohio.

U.S. steel consumers annoyed

Unfortunately for Bush, the tariffs sparked outrage from its most import trading partners, including the EU, Japan and other nations in Asia and South America. They also annoyed U.S. steel consumers like the auto industry, which suddenly had to pay higher prices for imported steel.

Dieter Ameling, president of the German Steel Federation, welcomed the U.S. decision in a statement: “We are pleased that in this way the looming trade war with the EU can be avoided. We now expect that our exports to the USA – which after the EU domestic market is the most important market for us – will return to normal.”

Lamy said European steel exports had dropped by around 15 percent due to the U.S. tariffs. But he said Washington’s decision to repeal the measure also showed how effective the EU could be when it worked together on a matter.

“When Europe is united, and it is on trade policy, it can play a role that corresponds to its weight,” he said.