"US-EU Near Agreement on Trump-Era Steel Tariff Dispute"

Negative Factors for Korea Subject to US Quota System

[Asia Economy Reporter Yujin Cho] Major foreign media reported on the 30th (local time) that the United States and the European Union (EU) are close to reaching an agreement on the issue of high tariffs on steel and aluminum imposed by former U.S. President Donald Trump.

The foreign media, citing six sources familiar with the negotiations, reported that the U.S. and the EU are in talks to resolve the steel and aluminum tariff issue and are expected to announce an agreement as early as this weekend.

The agreement involves a low-rate tariff quota (TRQ) system under which EU countries can export 3.3 million tons of steel to the U.S. annually duty-free, with tariffs imposed on quantities exceeding that amount. However, some products that were previously exempt from tariffs are expected to maintain their duty-free status.

Including this exemption, the volume of steel that the EU steel industry can export to the U.S. duty-free next year will be 4.3 million tons. This nearly restores the pre-tariff volume of 5 million tons, effectively removing tariffs on exports worth over 10 billion dollars, according to foreign media reports.

In March 2018, during former President Trump's administration, the U.S. applied Section 232 of the Trade Expansion Act, citing "national security threats," imposing tariffs of 25% on imported steel and 10% on aluminum. This policy was applied to the EU, China, and Japan.

In response, the EU retaliated in June of the same year with counter-tariffs on iconic American products such as bourbon whiskey, Levi's jeans, and Harley-Davidson motorcycles.

Foreign media reported that the current agreement will maintain the application of Section 232 on steel but exempt a significant portion of European products from the tariffs.

This agreement is also expected to impact the competitiveness of South Korea's steel exports, which are subject to the U.S. quota system. If the U.S. and the EU reach an agreement based on the TRQ system as reported, the EU could have more favorable export conditions than South Korea.

South Korea is blocked from exporting more than 70% of its average volume, whereas the EU can export 3.3 million tons duty-free and export additional volumes by paying certain tariffs.