European Parliament backs trade pact with US steel derivative curbs

The European Parliament and Council reached a provisional agreement May 20 on two pieces of legislation implementing EU tariff commitments under the August 2025 EU-US joint statement that includes a sunset clause expiring by the end of 2029 and provisions allowing Brussels to suspend tariff preferences if Washington maintains high duties on steel and aluminum derivatives.

The agreement strengthens oversight of steel and aluminum trade flows between the two economic blocs by empowering the European Commission to suspend tariff preferences if the US continues applying tariff rates above 15% on EU steel and aluminum derivatives beyond Dec. 31.

The commission must report to the parliament and council by Dec. 1 on the tariff treatment of these products, which became subject to increased US duties in August 2025 when Washington added 407 product categories to its list of derivative steel and aluminum products facing tariffs.

Steel sector impact

The steel and aluminum provisions address market instability that was created when the US expanded tariffs on derivative products last year, according to the agreement text. Parliament pushed to include language on derivatives in the main regulation, viewing the August 2025 US tariff expansion as increasing trade uncertainty for European steel producers and aluminum manufacturers.

The agreement establishes a safeguard mechanism that allows the commission to investigate whether tariff preferences granted to the US lead to import surges that threaten serious injury to the EU industry, including the agricultural sector.

The commission will be able to start an investigation on its own initiative, or on the basis of information provided by one or more member states or by the European Parliament. The commission will also report to the parliament and the council on a quarterly basis on changes in trade volumes and values of US exports of the goods covered by this legislation.

"It's been a rocky journey, but it was worth it. By setting the commitments under the joint statement into law, this regulation becomes part of the EU's toolkit to improve EU-US relations but also responds to pressure," Bernd Lange, International Trade Committee Chair and standing rapporteur for the US, said.

"This agreement is an important step towards greater predictability in transatlantic trade relations. With the introduction of the sunset clause and a strong suspension clause, Parliament has substantially improved the Commission proposal," he explained.

"The agreement also foresees stronger review and safeguard mechanisms, and clearer and regular democratic oversight. A stable transatlantic partnership can only succeed if both sides remain committed to reliability, restraint and mutual trust," he added.

The main regulation on industrial and agri-food imports will expire Dec. 31, 2029, unless renewed. Before that, the commission must conduct a comprehensive assessment of trade effects on EU industry, agriculture and small- and medium-sized enterprises, as well as changes in trade patterns with third countries. The commission may then present a legislative proposal to extend the regulation's duration.

The agreement also allows the commission to suspend tariff preferences if the US fails to address EU concerns regarding tariff treatment of Union exports that benefited from a 15% all-inclusive tariff ceiling until Feb. 24, 2026.

Rocky path to agreement

The agreement implements EU commitments under a joint statement reached July 27, 2025, between the European Commission president and US president.

The commission submitted legislative proposals Aug. 28, 2025, eliminating tariffs on all US industrial goods and providing preferential market access for US seafood and agricultural goods.

Parliament's International Trade Committee twice postponed votes originally planned for January 2026, first following US trade threats over Greenland, then after a US Supreme Court ruling on the use of the International Emergency Economic Powers Act.

Parliament adopted the main proposal March 26 by 417 votes in favor and 154 against, with 71 abstentions.

The International Trade Committee, NTA, will hold an extraordinary meeting June 2 to vote on the negotiation outcome, with plenary votes scheduled for June 15-18. Following council approval, the legislation will enter force the day after publication in the EU's official journal. A separate regulation extends tariff-free lobster imports until July 31, 2030, applying retroactively from Aug. 1, 2025.