WASHINGTON / ROME, October 30 (Reuters) – The United States and the European Union have agreed to end a nagging dispute over U.S. tariffs on steel and aluminum imposed by former President Donald Trump in 2018 , removing an irritant in transatlantic relations and avoiding an EU spike in retaliatory tariffs, US officials said on Saturday.

US Secretary of Commerce Gina Raimondo told reporters the deal would maintain US Section 232 tariffs of 25 percent on steel and 10 percent on aluminum, while allowing “limited volumes” of metals produced by the EU to enter duty-free in the United States.

It also ends one of the biggest areas of friction between the Allies and allows them to focus on negotiating new global trade deals to tackle global excess steel and aluminum capacity centered mainly in China and reduce carbon emissions from industries.

U.S. officials have not specified the volume of duty-free steel to be allowed into the United States under a tariff rate quota system agreed with the EU. Sources close to the deal, speaking on condition of anonymity, told Reuters that annual volumes exceeding 3.3 million tonnes would be subject to tariffs.

The deal grants two more years of duty-free access beyond the quota for EU steel products that were banned from the Commerce Department last year, US officials said.

The deal requires EU steel and aluminum to be produced entirely in the block – a standard known as “melt and cast” – to qualify for duty-free status. This provision aims to prevent metals from China and non-EU countries from being minimally treated in Europe before being exported to the United States.

“The agreement to negotiate a carbon-based deal on steel and aluminum trade deals with both Chinese overproduction and carbon intensity in the steel and aluminum sector. aluminum, “White House national security adviser Jake Sullivan told reporters. “It shows that we can solve the climate crisis while protecting our workers better – that we don’t have to choose between the climate and the economy.”

President Joe Biden has sought to mend barriers with European allies following Trump’s presidency to more broadly confront China’s state-led economic practices that have led Beijing to build massive excess steel production capacity that flooded the world markets.

Raimondo said the deal will lower costs for US steel-consuming manufacturers. Steel prices have more than tripled in the past year to record highs of $ 1,900 per tonne as the industry has struggled to cope with increased demand following shutdowns linked to the COVID-19 pandemic, contributing to inflation.

Europe exported about 5 million tonnes of steel per year to the United States before Trump imposed Section 232 tariffs in March 2018 for national security reasons.

The deal also eliminates Europe’s retaliatory tariffs on U.S. products, including whiskey and Harley-Davidson motorcycles (HOG.N), which were due to double on Dec. 1, U.S. officials said.

The United States Allows Duty-Free Imports of Steel and Aluminum from North American Trading Partners, Mexico and Canada, with Mechanism to Reimpose Tariffs in the Event of an Unexpected “Increase” import volumes.

Reporting by David Lawder and Andrea Shalal; Additional reporting by Jan Strupczewski; Editing by Will Dunham and Heather Timmons

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