Biden, EU leaders to meet as trade tensions, Israel-Hamas war simmer

US President Joe Biden will discuss the Israel-Hamas war and stress unity on support for Ukraine when he hosts European Council President Charles Michel and European Commission chief Ursula von der Leyen on Friday amid dimming hopes for resolving longstanding trade disputes.

Trade negotiators were scrambling on Thursday to avoid the US resuming import tariffs on EU steel and aluminum imposed by then-President Donald Trump in 2018 before November.

The Israel-Hamas war, and a looming ground offensive by Israel into Gaza would likely dominate the discussions, von der Leyen said in Washington, warning about the risk of "regional spillover" from the conflict.

The Biden administration suspended tariffs on EU steel and aluminum imports on the condition that both sides agree by the end of this month on measures to address overcapacity in non-market economies such as China, and to promote greener steel.

Any deal seems far off, with Washington keen that the EU apply the metal tariffs to imports from China and Brussels refusing to do so before a year-long investigation to comply with World Trade Organization rules.

Also elusive appeared a deal to lessen the hit from the U.S. Inflation Reduction Act, which offers consumers tax breaks to buy electric vehicles (EVs) assembled in North America.

One of the sources said the two sides had made some progress on an agreement that would allow EVs with EU-sourced critical materials - cobalt, graphite, lithium, manganese and nickel - to qualify for partial tax breaks, but were unlikely to finalize an agreement before Friday's summit.