The US and European Union’s negotiations over Trump-era tariffs and US green subsidies have been stalled, with no breakthroughs made before a White House summit.
European Commission chief Ursula von der Leyen emphasized the Israel-Gaza conflict and Ukraine’s continued support, suggesting trade issues would be put on hold.
US and European trade negotiators met but were unlikely to reach an agreement on steel tariffs or reducing the impact of US tax breaks on electric vehicle purchases in North America. US Trade Representative Katherine Tai met with European Commission Executive Vice President Valdis Dombrovskis, highlighting the need for the two sides to find mutually beneficial solutions.
The escalating Middle East violence and concerns about eroding support for Ukraine have weakened the push for agreements. Michel emphasized the importance of the US and EU “sticking together” on shared values and commitment to democracy, given the Israel-Hamas conflict.
Negotiations between the US and EU are ongoing, with the US suspending import tariffs on EU steel and aluminium imposed by Trump in 2018. However, both sides must agree by the end of this month on measures to address overcapacity in non-market economies and promote greener steel.
The transatlantic partners are struggling, with Washington requesting the EU to apply the metal tariffs to imports from China, while Brussels cannot do so before a year-long investigation to comply with World Trade Organization rules.
Bernd Lange, chair of the trade committee of the European Parliament, emphasized that potential measures should be based on objective investigations, not political considerations. The US is also attempting to reconcile the EU’s carbon border tariff system with a US approach to promoting a green economy through subsidies.
The US has proposed a green steel club with tariff-free membership for all allies, but rules on state-owned enterprises would prevent China from joining. EU officials describe the discussions as “fluid” and “hard”, with a source in Washington describing the EU’s stance as “unhelpful”.
It is unclear whether a compromise can be reached before Friday’s summit. A deal to reduce the impact of the U.S. Inflation Reduction Act on electric vehicles (EVs) assembled in North America is also elusive. Progress has been made on an agreement allowing EVs with EU-sourced critical materials to qualify for partial tax breaks, but finalization is unlikely.