EU Parliament Approves Stricter Tariffs on Steel Imports to Protect Industry

EU steel production has declined significantly in recent years, with 25,000 jobs (8% of the sector's workforce) lost between 2018 and 2024. The Global Forum on Steel Excess Capacity estimates that by 2026, global steel mills will be able to produce 36% more than demand requires.

The decision follows threats from former US President Donald Trump to raise tariffs on EU auto imports from 15% to 25% if the bloc didn't comply with trade agreements. The US already maintains 50% tariffs on European steel and aluminum.

Global Steel Glut

EU Commissioner Costas Kadis told Parliament that global steel overcapacity could reach 721 million tons next year, with 80% coming from countries that have free trade agreements with the EU.

The package includes a 'safeguard clause' that allows the EU to review the measures by 31 December 2029 - one year after Trump's potential term would end. If European companies are found to be harmed, the tariffs could be adjusted.

German industry representatives had pushed for the deal, with DIHK foreign trade chief Volker Treier warning: 'Given the threat of further US tariffs and ongoing legal uncertainty in transatlantic trade, the EU must not become an additional factor of uncertainty itself.'

The measures particularly target cheap steel imports from China, India and Turkey, which have undercut European producers. China's steel exports rose 60% year-on-year in April alone.

US Trade Tensions

Conservative MEP Zeljana Zovko, who negotiated the deal, stated: 'I'm proud to announce that Europe has avoided a harmful escalation of transatlantic trade tensions and protected European companies, investments and millions of jobs on both sides of the Atlantic.'

However, Social Democrat Bernd Lange, chair of the Parliament's trade committee, expressed reservations: 'I still don't consider the deal itself to be good.' He revealed Trump had linked trade talks to European defense capabilities, asking: 'By the way, can you actually defend Ukraine alone?'

The agreement follows years of trade tensions that began when Trump first imposed steel tariffs in 2018. The EU responded with countermeasures but saw its steel production continue to decline.

Analysts note the deal prevents a full-scale trade war where both sides might impose increasingly drastic tariffs. 'The most important thing is that a feared trade war, where Europe and the US impose ever more drastic tariffs on each other, is avoided,' said one EU official.

Political Reactions

The European Steel Association reports that in 2024, the EU accounted for just 7% of global steel production, compared to 4% for the US. Asian producers dominate the market with 74% of global supply.

WTO measures have proven ineffective in addressing the imbalance. The EU is currently negotiating with over 20 trading partners in Geneva to establish new quotas under existing free trade agreements.

The package includes prepared counter-tariffs on $93 billion worth of goods that could be implemented if needed. Another 'anti-coercion instrument' remains available for future trade disputes.

While protecting European industry, the measures may lead to higher costs for construction and manufacturing sectors that rely on imported steel. Consumer goods containing steel components could also become more expensive.

Economic Impacts

The decision comes as Switzerland considers immigration restrictions that could affect cross-border workers in the steel sector. 'With neighbors you need good relationships, otherwise it gets difficult,' remarked one EU diplomat.