This week, the European Union will work to prevent the reimposition of metals tariffs from the Trump administration and to mitigate the harm that would be done to the U.S. Inflation Reduction Act (IRA) and its subsidies for electric vehicles.
Friday’s summit between U.S. Vice President Joe Biden and Ursula von der Leyen, President of the European Commission, and Charles Michel, President of the European Council, aims to demonstrate transatlantic cooperation on economic and political issues.
The first will be a suggested joint statement on actions to address global steel and aluminum overcapacity and support sustainable production.
With an end-of-October deadline to strike an agreement, Washington has requested Brussels to take action against Chinese steel producers in exchange for staying away from the reimposition of Trump-era tariffs on E.U. steel and aluminum.
In meetings last week, several E.U. nations, which would have to consent to any deal, emphasized that measures must adhere to WTO rules, which prohibit imposing tariffs on third parties like China before an investigation to identify excessive subsidies or dumping. This is contrary to U.S. policy.
The U.S. strategy to encourage greening its economy through subsidies is being reconciled with the E.U.’s system of carbon border tariffs.
The E.U. nations have taken issue with these subsidies, mostly in the IRA, because they have local content restrictions. For instance, American consumers who purchase an electric car are eligible for tax benefits of up to $7,500, but only if the vehicle’s final assembly takes place in North America. The extraction and processing of essential minerals must occur in a nation with whom the United States has a free trade agreement to qualify for half of the tax credit.
Cobalt, graphite, lithium, manganese, and nickel are important minerals that would benefit E.U. suppliers, and the E.U. is hopeful that the summit would result in an agreement on these as well. According to Eurostat statistics, the E.U. exported these minerals or goods primarily comprising them to the United States for 3.5 billion euros ($3.7 billion) in 2022.
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