The United States and Japan have come to an agreement to reduce tariffs imposed by Trump on the import of about 1.25 million metric tonnes of Japanese steel imports each year.
Under the terms of the agreement, Japan promises to assist in the reduction of surplus steel supplies, which drives down costs.
The deal aims to end “unfair practices” in the world’s steel industry, which is controlled by China. The Biden administration has already reached an agreement with the EU, but tariffs on UK goods remain in effect.
According to US Commerce Secretary Gina Raimondo, this deal on tariffs with Japan, which will come into takes effect from 1 April “will further help us rebuild relationships with our allies around the world as we work to fight against China’s unfair trade practices”.
Several countries were hit with tariffs during Donald Trump’s administration, alleging cheap metal imports as a national security danger.
Under the new agreement, the United States will no longer apply a 25% tariff on Japanese steel imports, excluding aluminum, up to a 1.25 million metric tonne annual threshold.
Meanwhile, Tokyo has stated that it will take steps within the next six months to encourage a more equitable steel market, as seen by the US and Japan.
These include a levy to offset subsidies received by an exporter and a tax on items perceived to be priced below market value.
Investment analysts were cautiously optimistic when they heard the news.
“This lifting of Trump-era tariffs on steel is consistent with expectations that the Biden administration would align its geo-political and trade alliances,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, told the BBC.
“However, the reality is that even the initial tariffs did not impact China too badly. So, this deal may really be more about reparations of relations in a longer trade game,” he added.
A deal between Brussels and Washington went into effect on January 1st, allowing tariff-free shipments of EU steel and aluminum to the United States.
The UK, on the other hand, has failed to negotiate an agreement to reduce tariffs on steel and aluminum exports imposed by Trump.
The matter will be addressed “when the time is appropriate,” according to US Trade Representative Katherine Tai.
(Adapted from BBC.com)