EU steel industry braces for significant impact of new US tariffs

The European steel industry is preparing for potential challenges as the United States introduces new trade measures, which could have significant repercussions for EU steelmakers. According to the latest edition of MEPS International’s European Steel Review, revisions to the European Commission’s import safeguard measures might lead to stricter controls, following former President Donald Trump’s announcement of a 25% tariff on US steel imports.

The US tariffs, set to take effect on March 12, will eliminate existing free-trade agreements, exemptions, and product exclusions that were initially introduced under Section 232’s tariffs in 2018. Analysts anticipate that this move could increase the influx of low-cost steel materials into Europe as exporters seek alternative markets.

Dr. Henrik Adam, president of the European Steel Association (Eurofer), highlighted the potential impact on EU steel exports. “Around 3.7 million tonnes of EU steel exports and 23 million tonnes of materials shipped to the US from other countries will be affected by the new tariffs,” Dr. Adam stated. He emphasized that the EU steel sector is not in a position to endure further export sales losses or absorb increased import volumes, especially in the context of weak domestic demand.

The European steel industry has already faced considerable challenges, with the closure of nine million tonnes of capacity and over 18,000 job cuts announced in 2024. Dr. Adam warned that the new US measures could exacerbate the situation, potentially threatening the profitability of EU steelmakers.

In response, Eurofer is urging the European Commission to tighten import quotas and extend its safeguard measures beyond their current expiration date in July 2026. A failure to implement these changes, according to the MEPS report, could lead to declining steel prices and increased financial strain on European producers.

Market participants remain divided on the potential imposition of stricter EU import controls. While many rerollers and distributors rely on affordable Asian steel to maintain profit margins, current low market prices and a strong US dollar have already eroded profitability.

Looking back to 2018, MEPS analysis shows mixed outcomes of previous tariffs under Section 232. Following their introduction, EU steel exports to the US initially increased by 1.2% to 4.73 million tonnes in 2018 but then dropped by 17.9% in 2019 and by a further 35.3% in 2020 amid the Covid-19 pandemic. Despite a rebound under President Joe Biden’s tariff rate quota system, EU steel exports to the US during 2022-2024 remained 13.8% lower compared to pre-tariff levels from 2015 to 2017.

Germany, as Europe’s largest steel producer, could be particularly impacted by the new tariffs. German steel output rose by 5.2% to 37.2 million tonnes in 2024, with exports to the US increasing by 2.8% to nearly one million tonnes. However, weak domestic demand has already driven German suppliers to seek new markets within the EU.

Source: MEPS, Photo: Fotolia