EU Proposes Halving Steel Import Quotas and Imposing 50% Tariff in Sweeping Protectionist Move

Recently, the European Union's executive body has announced a series of stringent restrictions on steel imports, a move that has sent shockwaves through international trade circles and sparked widespread attention.

In a bid to protect the EU steel industry and bolster its position in tariff negotiations with the United States, the European Commission formally proposed on October 7, to halve its tariff-free steel import quota. The plan would see the annual duty-free quota reduced to 18.3 million tons, down from the original 33 million tons. For any imports exceeding this new threshold, a 50% tariff would be imposed on top of existing import duties.

The proposed measures are multifaceted. Firstly, the quota reduction represents a 47% cut, bringing the duty-free volume down to the level of the EU's total steel imports back in 2013. Secondly, the tariff on over-quota imports would surge from the current 25% to 50%. Furthermore, the EU plans to strengthen traceability management, requiring importers to declare the location where the raw steel was 'melted and cast'. This aims to prevent circumvention of tariffs through transshipment.

The European Commission seeks to implement these measures no later than July 1, 2026, to replace the steel safeguard measures expiring in June 2026.

Support and Opposition Coexist

Reactions to the proposal have been mixed. EU Industry Commissioner Stefan Sejourne described it as 'an extremely stringent provision without precedent in Europe', noting that once implemented, only about 10% of steel in the EU market would be exempt from tariffs. EU Commission Vice President Sejourne remarked that 'Europe's steel industry is on the brink of collapse'.

The European Steel Association (Eurofer) welcomed the proposal, calling it a 'milestone in industry defence' that would help safeguard jobs and drive the sector's green transition.

In contrast, the China Chamber of Commerce in the EU (CCCEU) criticized the plan as 'protectionist', expressing concern that it would raise costs for downstream industries like automotive and machinery.

Facing scepticism, EU officials rejected accusations of protectionism. EU Commission Vice President Šefčovič characterized the measures as necessary to 'safeguard sovereignty and employment', stating the policy aims to address 'global overcapacity'.

Potential Wider Impact

The new 'smelting and casting' rule could create obstacles for Chinese steel exports to the EU, which are sometimes transshipped through countries like Turkey. This may force Chinese steel enterprises to re-adjust their export strategies.

Furthermore, the EU's action may signal a broader trend. After the US extended tariffs and quotas to sectors like photovoltaics and electric vehicles, the EU-facing industrial decline and competitive pressures-may similarly extend such tools to sectors like chemicals and machinery. Such moves could reshape global supply chains and intensify trade frictions, leading to a more complex and unstable global trade environment.