It is being reported that the European Commission on behalf of the European Union is set to propose cutting steel import quotas by nearly half and then introducing a 50% tariff on volumes above those revised quota levels. The measures will be part of a new package due to be unveiled on October 7. Steel imports into the EU are currently limited by safeguards, but these are set to expire in mid-2026 as per World Trade Organisation rules. The 50% tariff rate would put the EU in line with Canada and the United States, though the latter’s tariffs apply from the very first tonne. The EU is also investigating the potential for aluminium safeguards as well as export duties on scrap metal. According to the European Steel Association (EUROFER), the European steel industry is currently in recession as far as apparent steel consumption and steel-using sectors are concerned. The Association said in its latest Economic and Steel Market Outlook that growth prospects are now delayed at least until 2026.

“The inability to find an agreement on steel and the vagueness of the US-EU Joint Statement on trade is detrimental to our producers, who remain subject to a 50% tariff and are de facto cut off from their second export market,” said Axel Eggert, Director General of EUROFER, following the publication of the Outlook. “It’s everything but the certainty we need in these already turbulent times. With cheap imports continuing to be diverted to the EU, we cannot help but fear there will be further closures and layoffs including in our downstream sectors. Our last resort to tackle global overcapacity lies with the upcoming new EU trade measure,” he added.

Since the United States imposed tariffs on imported steel and aluminium, pressure has grown on manufacturers worldwide to further penetrate existing markets and to find new ones. This situation is exacerbated by a growing excess capacity of steel which the OECD predicts will hit 721 million metric tonnes in 2027. Stainless steel giant, Outokumpu, is acutely aware of the problem. “Currently, European producers are struggling with low-capacity utilisation levels due to low demand, a high share of low-priced Asian imports and 50% export tariffs to the US,” said Outokumpu’s President and CEO, Kati ter Horst in a company statement. “Efficient safeguards to create a level playing field for the European steel industry are essential for Europe’s independency in mobility, infrastructure, defense and clean tech – and for ensuring a business case for EU steel decarbonisation,” she added. The statement said Outokumpu advocates global tariff rate quotas with a maximum cap per country of origin. The company said tariffs should rise to 50% on each tonne above the quota, and that the country of origin would be defined by where the steel was melted and poured. In this way, producers could not circumvent the quotas by further processing steel in another country.

Outokumpu highlighted another issue with products coming from China and elsewhere. “In general, stainless-steel production in Europe uses mainly scrap as a raw material, which significantly reduces the carbon footprint of European production compared to Asian producers. If (foreign) steel is allowed to take over the European market, Europe’s carbon footprint will increase, scrap will not be used enough, European melting capacity will decrease, and Europe will become dependent on Asian countries like Indonesia and China. We need trade defence measures to guarantee economic stability, innovation and sustainability development in the EU,” said ter Horst. 

A no less worrying assessment of the worldwide steel market was heard at the recent ASEAN Iron and Steel Forum in Kuala Lumpur. Liew Chin Tong is Malaysia´s Deputy Minister of Investment, Trade and Industry. In his address to the gathering, Chin Tong said the global steel industry faces five immediate challenges, the first of which is steel nationalism. “The prolonged debates about Nippon Steel’s acquisition of US Steel and the golden share held by the US Government are an indication of what is to come. There will be more steel nationalism. Higher tariffs on the part of the US are here to stay,” he predicted. Second, he said the slowdown in China´s construction industry and infrastructure building will continue to have global consequences. His third point was the knock-on effect. “The policy choices of the US and China and their market conditions will impact other markets. For instance, the sectoral tariffs on steel by the Trump administration created second order effects which saw steel exporters from China, Japan, South Korea, Taiwan and ASEAN countries moving products originally destined for the United States market to other markets. This resulted in a downward spiral for prices, capacity utilisation and profitability in quick succession,” Chin Tong told the Forum. His fourth point was the proliferation of trade remedies. He said low-priced exports had led to a surge in anti-dumping cases. “During 2024, 19 governments initiated 81 anti-dumping investigations involving steel products. This was a five-fold increase on the 2023 level,” he said. The fifth challenge concerned the European CBAM. “The European Union’s carbon border adjustment mechanism (CBAM) will have consequences for the global steel industry and the sooner we have a clear pathway to deal with CBAM the better,” Chin Tong declared. He ended his address by calling for dialogue. Now is not the time for a steel war, he said. Now is the time for steel diplomacy.