RThere’s nothing like finding a common enemy to end a family feud. The European Union and the United States are on the verge of doing so at the expense of China. This concerns steel imports. According to the British daily The Financial TimesEurope is expected to announce by the end of October the launch of an anti-dumping investigation against Chinese steel as part of an agreement with Washington.
The American-European quarrel dates back to 2018, when President Donald Trump decided to tax imports of steel and aluminum from China but also from Europe by almost 25%. Brussels responded by penalizing imports of bourbon and Harley-Davidson motorcycles. Not precisely nuclear weapons, but the start of a long dispute, even if these measures and retaliations were frozen in 2021.
To get out of this situation, an initiative called the “global agreement on responsible steel and aluminum” was set up. An agreement in principle is to be announced at a meeting in Washington on October 20.
Carbon tax at borders
Beyond resolving a nasty quarrel, this attention to Chinese imports is part of a broader perspective of Europe’s concern about the difficult coexistence of its climate ambitions and the maintenance of its industry. The imposed end of thermal engines in cars is panicking European manufacturers, who are warning of a surge of Chinese cars, while the promotion of renewable energies also threatens to result in an improvement in imports.
Investigations in the name of competition are a method of fighting which has the advantage of being compatible with the rules of international trade. On September 13, Brussels announced the launch of a procedure of this type against electric cars, and Competition Commissioner Didier Reynders indicated on October 6 that he could do the same with wind turbines.
Brussels’ other weapon is the carbon tax at the borders. Old request from steel manufacturers, it entered on 1er October in the testing phase and will affect, among other things, imports of steel, aluminum, cement, fertilizers, hydrogen, electricity. From 2026, this carbon tax will apply to imported products, in the same way as their European equivalents. The fortress is being put in place with enormous uncertainty: what will be the consequences for downstream sectors which could be tempted to set up elsewhere to buy their steel cheaper? The end of twenty years of free trade will not be without sacrifice.