From today, Wednesday, July 1, the new system of steel import tariffs and quotas developed by the European Commission to protect the EU steel industry from foreign competition comes into force. Brussels has in fact reduced by 47 percent the amount of steel that can be freely imported into the Union, lowering it from 39 million tons to 18.3 million; at the same time, it has raised tariffs to 50 percent on volumes exceeding the quota, which apply to twenty-six categories of steel products.
HOW THE NEW STEEL QUOTA SYSTEM WORKS
Half of the free import quotas have been reserved for countries with which the European Union has free trade agreements (the so-called FTA partners); the other half will be open to all countries, whether FTA partners or not. The Commission, however, specified that some countries will receive specific import quotas based on their historical steel trade volumes with the Union. For example, the UK’s quota has been reduced to 1 million tons, down from 1.7 million.
In 2025, steel imported into the European Union came mainly from Turkey, South Korea, Indonesia, China, India, Ukraine, and Taiwan. The Financial Times writes that 80 percent of European steel imports come from FTA partners, and that countries accepting the new European regime will receive on average 66 percent of their historical export quotas. Countries without a free trade or other agreement with the Union, such as China, will receive on average only 31 percent of their historical quota.
THE OVERCAPACITY PROBLEM
Brussels explained that the new rules aim to protect the European steel industry from the so-called international “overproduction,” meaning the global excess supply of steel relative to demand, which is driving down selling prices of the alloy and undermining the profitability of steel mills in the Old Continent.
In particular, European plants cannot compete with Chinese steel prices – Beijing is the world’s largest steel exporter and subsidizes producers – because they have much higher production costs, also linked to energy expenses and compliance with pollution emission regulations. Since 2008, the European steel industry has lost over one hundred thousand jobs, with seven thousand layoffs just last year.
“Global steel production overcapacity remains a serious problem […] and continues to distort international markets,” the Commission stated, adding that the new tariff and quota system will “restore fair competition.”
According to the OECD, by 2027 global steel production overcapacity will exceed 720 million tons.
THE ANTI-CHINA TRACKING
The measure developed by the Commission also includes a sort of traceability mechanism designed to counter China’s trade triangulations: Brussels wants to prevent Beijing from circumventing tariffs and quotas by passing its steel through a third country instead of exporting it directly to the Union.
Also for traceability purposes, steel companies will be required to provide information on the countries where the steel was melted and cast.
WHAT THE EUROPEAN STEEL INDUSTRY THINKS
According to Brussels, the new rules will raise the utilization rate of European steel mills from 65 percent (the current average) to 80 percent. However, according to the industry association Eurofer, it will not be possible to exceed 73-75 percent capacity without intervention on the downstream segments (downstream, in jargon) of the steel supply chain, such as rolling and sheet production for the automotive sector.
