A new deal between Brussels and Washington could see the EU and US team up to create a joint tariff zone for imports of metal products from China.
According to a proposal from the European Commission, the two sides would work together to agree "adequate tariff protection" against imports from "non-market excess capacity" sources, Politico reports.
In practice, this would mean tariffs of 25 percent for steel items and ten percent for aluminum. Although the US already imposes such duties on Chinese imports and the EU has its own similar tariff regime, a coordinated approach would aim to present a united front against a key global competitor.
Politico noted that the goal would be to create a club of "like-minded economies" to better counter countries that offer large subsidies into key sectors that would undercut domestic producers.
The so-called Global Steel and Aluminum Arrangement is part of negotiations between the US and the cabinet of EU president Ursula von der Leyen over tariffs and would also seek to address green concerns by discouraging companies from trading with nations that use carbon-intensive processes.
It includes six criteria that would enable other countries to join the group, with Politico noting some of these are tailored to exclude China.
For example, one requirement is for economies to "refrain from imposing export restrictions on relevant raw materials, intermediate inputs, and other related products”. This is said to take aim at Beijing, which introduced export controls on gallium and germanium - two metals crucial for semiconductor production - in August.
Bloomberg also noted that the proposal would aim to settle a long-running dispute between the EU and US over metals tariffs, which goes back to 2018, when tariffs were introduced on all metal imports, including those from the EU, by President Donald Trump, citing national security concerns.
These measures have been temporarily lifted for EU products, but levies will automatically come back into force from 2024 unless a permanent deal is agreed between Washington and Brussels before the end of the year.
While the proposal is unlikely to go down well with other steel-producing countries, and may lead to action at the World Trade Organization, Politico also reported that several European capitals have raised concerns about being sidelined by a Brussels-led approach to talks.
One diplomat told the publication: "The thinking in the Von der Leyen cabinet seems to be very much a US [way of] thinking, not EU thinking. Member states need to feel that their interests are duly represented by the Commission, by the Von der Leyen people in these talks."