The EU Commission announced on Tuesday it would double its duties to 50% for steel imports above the AA tariff-free quota – with plans to reduce the quota by 47% to 18.3 million tonnes per year. The proposal is subject to approval by the 27 EU member states and the European Parliament
The decision comes as part of efforts to address global overproduction and a decline in European output that has left a third of the bloc’s steel production capacity idle.
But questions are already being raised about whether the bloc that advertises itself as a paragon of free trade has learned a lesson from US President Donald Trump’s strategy, after Brussels matched 50% steel tariffs imposed by Washington earlier this year.
Or is it simply trying to protect its domestic steel industry from overcapacity and get a better deal with the US on European steel exports?
Is the EU steel levy a protectionist measure?
The problems of the EU steel industry have been mainly attributed to China’s dumping of excess supply at cheap rates into the European market.
But China immediately hit back and slammed the EU Commission’s steel tariffs as a “protectionism move.”
In a WeChat statement quoted by a Chinese daily newspaper Global TimesThe China Chamber of Commerce in the EU (CCCEU) said: “Although China’s steel exports to the EU account for only a modest share of its total global exports, this move signals a worrying increase in trade protectionism within the EU market.”
The statement further said that such trends “contrary to the EU’s long-term commitment to open, rules-based and predictable trade.”
But the EU says the higher tariffs only target excess volumes and still offers steel quotas that are not subject to the higher levies.
The European Steel Association (Eurofer) welcomed the new policy and described it as a “lifeline” for the bloc’s steel industry, which has shed nearly 100,000 jobs within the past 15 years.
one in statementEurofer said the Commission’s decision was in line with trade rules set by the World Trade Organization (WTO).
The industry group argues that “unlike US tariffs, which impose a 50% duty on all steel imports,” the EU would introduce a “tariff rate quota (TRQ) system, allowing a reasonable amount of imports to enter Europe free of tariffs.”
This quota of 18.3 million tonnes of tariff-free steel imports, Eurofer said, reflected 2013 market conditions “before the first wave of the Chinese steel flood” and was roughly equivalent to “the combined steel production of France, Belgium and Luxembourg”.
“A 50% tariff would be imposed only on unsustainable imports above the quota level,” the industry group said in a statement.
Is Brussels asking for concessions from Trump?
The EU tariffs come in light of similar steel tariff hikes by the Trump administration earlier this year.
EU Trade Commissioner Maros Sefcovic said at a press conference in Strasbourg on Tuesday that Brussels decided to proceed “in our European way”, which meant “keeping European markets open” and “offering quotas to our partners.”
He told reporters, “What was clear from the US was the question: ‘Look, we have already taken very strong measures – what are you Europeans going to do?’
As some observers see the EU tariffs as a bid to persuade Trump to reduce his 50% duties on European steel imports, Eurofer no doubt hopes for US concessions.
“We hope these new provisions will lay the ground for renewed negotiations with the Trump administration to remove tariffs and resume work on a coalition to ring-fence against global overcapacity,” the group’s statement said.
How to get Trump back to the negotiating table?
Penny Nass, acting senior vice president for innovation and competitiveness at the German Marshall Fund (GMF), argues that the EU-US tariff deal struck in August also included “cooperation on ring-fencing of its domestic markets” from Chinese overcapacity, which could give the EU some “preferential access” for its products to the US market.
Speaking to DW, he said curbing overcapacity and ensuring fair market conditions for the steel, iron and aluminum industry “have been a failing feature of US-EU negotiations for decades.”
“The EU’s steps show that the US and the EU are coming together more to tackle this issue in a coordinated way,” he said.
And Alberto Rizzi, policy fellow at the European Council on Foreign Relations (ECFR), believes the EU’s steel tariffs are also an “indirect message” to Washington that Brussels could impose even higher tariffs.
“It is unlikely that the US will reduce tariffs on EU steel imports, but it could encourage Washington to offer the EU a quota arrangement under which a certain percentage of EU steel exports could go to the US tariff-free,” he told DW.
But such a policy could harm the EU’s relations with other steel producers, Rizzi said.
Collateral damage for UK and India?
Meanwhile, in the United Kingdom, fears are growing that EU steel tariffs will pose an “existential threat” to the UK steel industry, says Alasdair McDiarmid, assistant general secretary of the Community Trade Union, the dedicated labor union for British steelworkers.
Since around 80% of UK steel exports go to the EU, making the bloc the largest market for British steel, “losing access to this market would have a devastating impact on British jobs,” McDiarmid said in a statement,
With British Prime Minister Keir Starmer this week announcing he is in talks with Washington and Brussels, Penny Naas thinks the UK is likely to be included in tougher action against Chinese exports.
Another major steel producing country to be affected by the EU’s new tariffs is India. About 3.3 million tonnes, or 60% of India’s total steel exports, was headed for the block in 2024, According to Sandeep PoundrikSecretary, Indian Ministry of Steel.
The EU is currently negotiating a free trade agreement with the Asian country, with an Indian delegation also expected to arrive in Brussels this week. Taxing Indian steel imports under the EU’s sweeping carbon emissions rules for imports is already a major point of contention.
Edited by: Uwe Hessler