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**NOVEMBER 1, 2021**

Kuttner on TAP

Biden's Smart EU Trade Deal

The new quotas on steel and aluminum imports get the balance between
diplomacy and industrial policy just right.

When Donald Trump imposed tariffs mainly targeted at China, he also
slapped them on friendly nations. This move was widely panned. In fact,
steel and aluminum are in global oversupply, reflecting a variety of
hidden subsidies even from democratic allies. And if we want to keep
domestic industries at all, steel and aluminum need relief.

What to do? In his recent announcement
, Biden
got it just right.

The deal ends the current tariffs, of 25 percent on European steel and
10 percent on aluminum-but only on exports that stay below historical
levels. Any exports over 3.3 million metric tons of steel annually will
still pay the tariffs. In return, the Europeans ended retaliatory
tariffs against U.S. exports of several products, including orange
juice, bourbon, and motorcycles.

The deal also opens the door to a general agreement to manage global
oversupply, and to penalize countries that use dirty modes of
production. Exports from China, which produces about half the world's
steel, mostly using coking coal, will still incur the tariffs.

At a press conference with the European Commission president, Ursula von
der Leyen, Biden said that the deal would "restrict access to our
markets for dirty steel from countries like China, and counter countries
that dumped steel in our markets, hammering our workers."

This deal did not just happen. It was the result of long-overdue
revisions in U.S. assumptions about free trade and industrial policies,
and careful diplomacy led by the U.S. trade rep, Katherine Tai.

After decades of globalist self-delusion under both parties, and four
years of strategically incoherent nationalism under Trump, the U.S. now
embraces effective managed trade. And our government acknowledges that
key domestic industries and their workers need to stay in the game.
Europe, which has long had a more nuanced view of trade and industrial
policy, actually welcomes this shift.

Well done.

~ ROBERT KUTTNER

Follow Robert Kuttner on Twitter

Robert Kuttner's latest book is
The Stakes: 2020 and the Survival of American Democracy
.

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