European Union and U.S. Reportedly Agree on Metal Tariffs Truce

According to ReutersBloomberg and other media outlets, the European Union has reportedly agreed to at least a partial truce with the United States in a dispute over metal tariffs.

The European Commission, which oversees EU trade policy, says it will suspend a planned hike of retaliatory tariffs for up to six months. The move will seemingly spare products such as American-made boats, bourbon, motorcycles and other products from a doubling of EU duties which had been set to take effect June 1.

In a joint statement, Brussels and Washington said that, as allies, they could promote high standards, address shared concerns "and hold countries like China that support trade-distorting policies to account."

The discussions, which will be ongoing before the end of the year, will also attempt to address global steel and aluminum overcapacity.

These latest trade wars began in 2018 when former President Donald Trump imposed duties on steel and aluminum from Europe, Asia and elsewhere, citing "risks to national security." The EU subsequently retaliated and tariffs on a range of American products were set to jump to 50% on June 1.

Reuters reports that "under the agreement with the Biden administration, the EU will refrain from increasing those tariffs." Negotiators on both sides of the Atlantic are reportedly working to eventually remove the duties but are not yet ready to do so, officials have said.

The United States will maintain its tariffs of 25% on steel and 10% on aluminum, which also apply to imports from China, India, Norway, Russia, Switzerland and Turkey.

This move comes a month or so before President Biden heads to Europe for his first overseas trip as president, traveling in mid-June to the United Kingdom and Belgium.

Biden will attend international summits during the trip, including the G-7 summit in Cornwall, England, from June 11-13 and then the June 14 NATO Summit in Brussels. While in Brussels, Biden will also participate in a U.S.-EU summit, the White House said.

One EU diplomat said it would have been "terrible optics" if they raised tariffs on U.S.-made products just ahead of Biden's visit.

However, Reuters quotes Bernd Lange, head of the trade committee of the European Parliament, as saying the United States needs to come to a EU-U.S. summit with a "tangible commitment to reciprocate the EU gesture." Otherwise, he said, tariff hikes would be justified.