Economy

EU Steel Tariffs to Soar: How the Commission Plans to Shield Industry from Global Overcapacity

EU proposes 50% tariffs, lower quotas on steel imports to protect its industry from global overcapacity.

October 8, 2025, 8:34 AM

Enormous rolled steel sections for wind turbine towers lined up in a massive, brightly lit German factory hall with workers walking between them.

The large production hall at the Steelwind factory in Blexen, Germany, showcases massive rolled steel sheets that are being formed into sections for wind turbine towers. By Heide Pinkall / Shutterstock.com.

Executive Summary

The European Commission proposed doubling tariffs on steel imports to 50% for volumes exceeding a reduced duty-free quota of 18.3 million tonnes annually, down from 30.5 million tonnes.

These measures aim to protect the EU steel industry from global overcapacity (projected 720 million tonnes next year) and subsidised foreign competition, particularly from China, which has led to significant job losses.

The proposal, which includes a “melt and pour” rule to prevent circumvention, requires approval from the Council of the EU and the European Parliament, with broad support expected despite Germany’s unstated position.

The Story So Far

The European Commission’s proposal to significantly increase tariffs and reduce duty-free quotas on steel imports is a direct response to severe global overcapacity, particularly from cheap, often subsidised, foreign competition—especially from China. This situation has led to substantial job losses and underutilization within the EU’s steel industry, prompting the need for stronger protective measures as current import quotas are set to expire in 2026.

Why This Matters

The European Commission’s proposal to drastically increase steel import tariffs and reduce duty-free quotas signals a significant escalation in protectionist measures aimed at safeguarding the EU’s domestic steel industry and jobs from global overcapacity and subsidised foreign competition. This strategy, which includes a “melt and pour” rule to prevent circumvention, could lead to higher steel prices for European industries and potentially complicate ongoing trade relations with partners like the United States, despite calls for collaboration on global surpluses.

Who Thinks What?

European Commission President Ursula von der Leyen and the European Commission advocate for increased tariffs and reduced duty-free quotas on steel imports, believing these measures are necessary to safeguard the EU’s steel industry from global overcapacity and subsidised foreign competition, aiming to boost capacity utilisation and prevent job losses.

The EU steel industry, represented by lobby group EUROFER and union IndustriAll, strongly supports the proposed protectionist measures, viewing them as crucial to combat global surpluses, prevent further job cuts, and improve the industry’s operating capacity.

The European Commission on Tuesday proposed a substantial increase in tariffs on steel imports and a significant reduction in duty-free quotas, aiming to safeguard the bloc’s steel industry from global overcapacity and heavily subsidised foreign competition. The plan would double tariffs to 50% for imports exceeding a reduced quota of 18.3 million tonnes annually, down from the current 30.5 million tonnes.

EU Protectionist Measures

The proposal seeks to cut the amount of steel entering the EU duty-free by nearly 40%. Imports surpassing the new quota would face a 50% tariff, a notable increase from the current 25%.

European Commission President Ursula von der Leyen stated the necessity to “act now” due to global overcapacity damaging the industry. The Commission intends to collaborate with industry, member states, and global partners to address these challenges.

These measures are designed to boost the EU steel industry’s capacity utilisation levels, which currently stand at approximately 67%, to an estimated 80%.

Addressing Global Overcapacity and Subsidies

Global steel surpluses reached 600 million tonnes in 2023, with projections for over 720 million tonnes next year, according to the OECD. This surplus has led to European producers operating below capacity.

The pressure from cheap, often subsidised, steel—particularly from China—has resulted in significant job losses within the EU steel sector, with IndustriAll, the European steel union, reporting 18,000 cuts in the past year. A senior EU official highlighted that global overcapacities are more than five times the demand in the EU.

To counter tariff circumvention, the Commission’s proposal includes a “melt and pour” rule, requiring importers to declare the steel’s origin where it was initially melted and poured. This rule targets countries like China, accused of re-routing exports through other Asian nations or Turkey to access the EU market.

In 2024, the primary suppliers of steel to the EU included Turkey, India, South Korea, Vietnam, and China.

Political Landscape and Approvals

For the proposed measures to be fully adopted, they require approval from the Council of the EU, representing member states, and the European Parliament. President von der Leyen has urged both bodies to expedite the process.

EUROFER, a lobby group for leading EU steel producers, expressed optimism, noting a broad consensus among member states and MEPs for such protective measures. The Commission’s proposals align with a French initiative supported by ten other EU member states and 107 MEPs from various political groups.

Despite widespread support, Germany, as the EU’s largest car manufacturer, has yet to publicly state its position, which could be pivotal for the proposal’s success. The Commission remains confident of broader industrial sector backing, citing a consultation from August.

The new quotas would also apply to the United States, even as the EU and US are engaged in negotiations regarding existing 50% US tariffs on European steel and aluminium. The EU anticipates that both partners may choose to collaborate on addressing global steel surpluses.

Outlook

The current steel import quotas are set to expire on June 30, 2026. The European Commission aims to have these new protective measures for its steel industry formally adopted before that date.