Since 2021, the US and EU have been vowing to work on a green steel agreement. In 2022, the US proposed a “Green Steel Club” as a means to overcome a frozen retaliatory tariff dispute. One of the unstated goals of the club would be to wall off “unsustainable” Chinese steel that has undercut US and EU competition. According to a recent EURACTIV article, the details surrounding the deal are fluid. An existing arrangement with a tariff rate quota for a limited amount of US imports and the temporary suspension of tariffs for EU imports has been extended until the end of the year, after the US elections, whilst talks continue. Meanwhile the EU has implemented the Carbon Border Adjustment Mechanism (CBAM) which in a few years time will impose border tariffs on carbon intensive goods into the EU, including steel. The US is also reportedly now looking to propose a tariff based on the carbon intensity of steel imported from other countries. Should the US and EU come to an agreement on steel, this may be the first making of an informal club of countries aligned on trade and climate policies in relation to steel specifically. This club should be seen in the context of the wider development of a broader G7 supported “Climate Club” that was formally launched at COP28 last year. The club is a loose network of countries, mostly G7 but with some developing countries, looking to collaborate on trade with a view to reducing GHG emissions in the industrial sector. Steel is a prime candidate for this and it will be interesting to see how US EU steel negotiations develop, if at all and whether they will expand to include other countries.
