Europe and Japan have dropped threats of tit-for-tat trade retaliation after US President George W. Bush scrapped controversial steel tariffs ahead of schedule.
Despite possible political damage ahead of next year's presidential election, Mr Bush offered little to cushion the blow to US steel makers and workers, who accused the president of "capitulating to European blackmail".
In announcing the decision yesterday, Mr Bush said he would keep in place an existing system to licence and track steel imports so that he could "quickly respond to future import surges that could unfairly damage the industry".
Minutes after Mr Bush's move, the European Union suspended plans for retaliatory sanctions against $2.2 billion in US goods, including politically sensitive products such as citrus fruits from Florida.
Japan also said it would drop a threat to impose retaliatory tariffs on $458 million of US goods but added that it wanted to make sure the US tracking system did not impede trade.
"We hope that the United States will continue to abide by World Trade Organization (WTO) rules and play a leading role in maintaining free trade," Japanese Chief Cabinet Secretary Yasuo Fukuda told a news conference on Friday.
Mr Bush's reversal could spark a backlash against Bush in the battleground steel-producing states of Ohio, Pennsylvania and West Virginia as he seeks re-election in 2004.
The United Steelworkers of America union, representing nearly one million active and retired steelworkers, derided Mr Bush's "complete lack of mettle in calling the WTO's bluff" and said it would appeal to Congress for protection.
The decision came less than a month after the WTO ruled that the tariffs violated global trade laws.