EU plans to double steel import tariffs to 50% and cut quota volumes

The European Union plans to hike tariffs on steel imports to 50% and cut by nearly a half the volume of steel that’s allowed in before that higher rate is imposed, according to a draft proposal seen by Bloomberg. 

The EU currently has a temporary mechanism in place to safeguard its steel industry, which imposes a 25% duty on most imports once quotas are exhausted. That mechanism expires in June and the EU has been working to replace it with a more permanent regulation, which it plans to unveil next week. 

The European Commission, which handles trade matters for the EU, plans to boost the tariff rate to 50% “to minimize the risk of trade diversion,” according to the draft. The move will align the bloc’s rate with the US, which has sought to push back against overcapacity from China.  

 

The higher rate would apply to imports once a certain quota is reached. Across all product categories, the measures would cut the total volume of steel covered by the quotas to 18.35 million tons, an average reduction of 43.7% compared to levels seen in the year to July 2024, according to Bloomberg calculations.  

The plans outline quotas for specific product types based on historical averages. The commission is also seeking powers to set out country-specific quotas for the various thresholds. 

The measures would be reviewed every five years from July 2031 to evaluate overcapacity trends and their effects on the steel market, according to the proposal. The scope of the product types and categories would be reviewed within two years of the regulation’s adoption, the draft says. 

The mechanism also includes “melt-and-pour” provisions, which apply tariffs and quotas based on where the steel was first made. Such measures are designed to prevent major producing nations from rerouting steel into Europe via other countries. 

The bloc’s steel industry has faced a severe crisis in recent years as it grapples with cheap imports from China and other Asian economies. Furthermore, US President Donald Trump increased tariffs on steel and aluminum imports to 50% shortly after taking office.   

Separately, the EU is hoping to negotiate arrangements with the Trump administration that would lower the 50% rates the bloc’s steel and aluminium exports to the US currently face.  

The EU’s industry chief, Stephane Sejourne, told a closed door meeting Wednesday that the commission was planning to unveil its proposal to boost steel tariffs next week, according to a person familiar with his remarks.  

He said that while the EU continues to believe in an international order where trade is possible, “we will not be the only ones to impose on ourselves the principles that others no longer apply,” according to the person familiar with his remarks.  

Europe’s steel association, Eurofer, has been demanding tighter measures to reflect new market dynamics and requested a comprehensive post-safeguard trade regime after 2026 to address the destructive spillover effects of global steel excess capacity on the EU market. 

“If there are no strong barriers to ship in steel at below-cost into Europe, the main elements of European prosperity like cars, trucks, batteries and wind turbines, will not be able to be produced with our own steel,” said Henrik Adam, chief executive officer of Tata Steel Europe. “The commission has understood the risk and is now taking action soon on trade.”