EU steel deal to slow U.S. inflation, Commerce Chief says

The U.S.’s decision to remove tariffs on steel and aluminum from the European Union in a weekend deal with the bloc will help slow inflation for American consumers, Commerce Secretary Gina Raimondo said.

Prices paid by U.S. shoppers rose 5.4% in September, matching the fastest pace of increase since 2008. Unprecedented shipping challenges due in part to the Covid-19 pandemic, materials shortages, high commodities prices and rising wages have sharply driven up costs for producers, who have passed some of that along to consumers.

“This is going to help all those supply-chain issues,” Raimondo said in an interview Tuesday with David Westin and Guy Johnson on Bloomberg Television. “Steel is in cars and trucks, dishwashers, washing machines—we’re going to see prices go down on account of relaxing the tariffs, and that’s just going to help with inflationary pressures and some of the bottlenecks in the downstream supply chain.”

The U.S.-EU truce allows the allies to remove tariffs on more than $10 billion of their exports each year. It involves so-called tariff-rate quotas, which allows countries to export specified quantities of a product to other nations at lower duty rates, but subjects shipments above a pre-determined threshold to higher tariffs.

Now, the transatlantic partners face the challenge of translating their accord into a broader global arrangement that would penalize countries that don’t meet low-carbon targets for steel and aluminum exports. 

“What comes next is a global steel arrangement with the EU,” Raimondo said. “We’ve said very clearly that over the course of the next two years, we will work with our allies to come up with a global steel arrangement that preferences cleaner steel, and that preferences U.S.-EU steel.”

The deal marks a significant moment in repairing the U.S. trade relationship with Europe after Donald Trump’s disruptive presidency. The EU, from the start of the tariffs in 2018, rejected the premise that production from the bloc presents a national security threat to the U.S.

Raimondo said that it was unfortunate that the Trump administration sent the message of the EU exports being a danger to the U.S.

“The thing that endangers American national security and economic security is China,” Raimondo said. “It’s China excess capacity, that they have been dumping cheap steel into the EU, into the U.S. That is very much imperiling our steel industry and steel workers.”