The US and Japan are set to announce a deal that would cut Trump-era tariffs on steel, a person familiar with the matter said.
Under the agreement, a limited amount of Japanese steel will be allowed for import without the 25% levy imposed by President Donald Trump in 2018. If Japan goes over that amount, the tariff would return. Japan is one of the top 10 sources of steel to the United States – yet only accounts for about 4% of all steel imports, according to the Commerce Department.
The deal doesn’t apply to aluminum, on which Trump also imposed tariffs. It follows an agreement last year between the US and the European Union to ease Trump-era metal tariffs.
Trump imposed the steel and aluminum tariffs citing national security, and it caused some nations to impose retaliatory duties on their own products.
The move comes as the White House grapples with soaring inflation and a shortage of goods – issues exacerbated by the coronavirus pandemic. The President faces limited options when it comes to fixing the global supply chain issues at the core of the spiking prices, but lifting tariffs is something within his power that could ease the problem.
It would also be a shot at China by strengthening American business ties with Asian allies. The President has made countering China a centerpiece of his administration’s overall strategy in both domestic and foreign policy.
Biden has decided to leave tariffs in place on $350 billion of Chinese goods, including baseball hats, luggage, bicycles, TVs and sneakers, that were imposed by Trump. Some of those tariffs, which are paid by American importers, have been in place for nearly four years.
The President is facing pressure from the American business community to remove them as companies struggle with inflation and supply chain disruptions – but it’s becoming clear that China has failed to meet the purchase commitments it made in an agreement with Trump in 2020. Biden recently suggested that’s the reason he’s leaving the tariffs on Chinese-made goods in place.
While the tariffs imposed by the Trump administration were largely unpopular, the steel industry has been strongly urging Biden to keep the tariffs in place. They’ve argued that the tariffs have been essential to keeping the sector afloat during the pandemic. Removing them could prove unpopular among steel workers in battleground Rust Belt states.
The United States reached a similar deal with the European Union in October that eased Trump-era sanctions on aluminum and steel. As part of the deal, the EU also agreed to drop retaliatory tariffs against American products including Harley-Davidson motorcycles and Kentucky bourbon. Talks between the United States and the United Kingdom about steel tariffs are also underway.
This story has been updated with additional information.