The European Commission wants to erect a tariff wall to protect the strategically important steel industry from global overcapacity. Welcomed by the European steel industry, which is in a state of survival, but met with skepticism by European carmakers who fear higher production costs.
Specifically, the Commission wants to limit tariff-free imports of steel from other parts of the world to 18.3 million tons per year, a 47% reduction compared to the quotas for 2024.
Once these quotas are filled, the EU will impose an “unaffordable” tariff of 50% on the remaining imports. Currently, a tariff of 25% is in effect. In this way, the Commission aims to protect the EU market from “unfair global competition” and pave the way for a sovereign, low-carbon European steel industry.
The European Automobile Manufacturers Association (ACEA) is not enthusiastic about the idea. According to the organization, the measures the Commission wants to take go too far. It fears higher production costs for car manufacturers.
Specific quotas per country
The Commission insists that the measures, which may seem Trumpian because the US is also imposing a 50% tariff on all steel imports, do not violate World Trade Organization (WTO) rules. It also aims to initiate discussions with trading partners on specific quotas per country as soon as possible.
In doing so, the Commission could take the new transparency requirement into account. To prevent circumvention, importers will now have to indicate where the steel was smelted and cast.
The regulation, which must be approved by the member states and the European Parliament, replaces the safeguard measures introduced in 2019 to protect European industry from rising imports. These measures are set to expire at the end of June next year.
Crisis in the EU steel industry
European steel companies are in a state of survival. The sector suffered record losses last year. Capacity utilization was only 67% in 2024, whereas it should be 80%. Over the past 15 years, about one-fifth of production and 100,000 jobs have been lost.
Today, about 300,000 people still work in the industry. Directly and indirectly, the sector still supports 2.5 million jobs, including approximately 25,000 in Belgium, in factories such as ArcelorMittal in Ghent, among other cities, as well as NLMK La Louvière and Aperam Stainless near Charleroi.
The main culprit is global overcapacity, which is now five times higher than annual European demand and continues to grow, with China accounting for more than half of global production, being the most significant contributor.
As a result, imports into the European single market are rising, often at dumping prices, reducing sales opportunities for EU producers abroad.
ACEA fears higher production costs
Steel plays a crucial role in the transition to a low-carbon economy. For example, it is essential to produce solar panels, wind turbines, and electric cars. In the past, major customers, such as the automotive sector, were not always enthusiastic about previous measures aimed at protecting the steel industry.
But according to a source at the Commission, quoted by the press agency Belga, the recent consultation period has shown that these sectors have also become convinced that this strategic industry must remain in Europe. “That is a huge change compared to a few years ago.”
However, this is contradicted by the European Automobile Manufacturers’ Association (ACEA). According to the interest group, the proposal will lead to higher production and administrative costs for car manufacturers.
ACEA states that car manufacturers source approximately 90% of their steel purchases directly from Europe; however, steel products still need to be imported, such as automotive-grade steel and high-quality steel for car bodies, chassis, and safety systems.
According to the organization, quotas for automotive steel are always quickly exhausted under the current system. This means that significantly more will soon have to be paid for steel that falls outside the quota.
The central countries of origin of automotive steel to the EU are Turkey (15 to 20%), South Korea (10 to 15%), India (10%), Japan (10%), China (8 to 10%), Brazil (approximately 5%), and the US (3 to 5%).
BMW CEO Oliver Zipse has also warned that such measures could backfire, especially since car manufacturers are heavily dependent on global supply chains and China is a significant market for them.
The Belgian steel industry is satisfied
Philippe Coigné, Director General of the Federation of the Belgian steel industry, is, of course, pleased with the proposal. Coigné calls the decision “a condition sine qua non for continuing to invest in and maintaining an essential sector in Belgium, the fifth largest steel producer in Europe.”
However, he points out that the Carbon Border Adjustment Mechanism (CBAM), which relates to the price that European steel producers pay for their greenhouse gas emissions, should also apply to imported steel. “Legislation on this subject is currently being drafted, but there are still some loopholes,” Coigné said in several French-language media outlets.
