One’s got to do what one’s got to do.
That sentiment appears to encapsulate the European Union’s reasoning for its new protectionist measures targeting foreign steel — a move that marks a sharp break from the free-market principles that have long defined the bloc’s trade ethos.
The European Commission on Tuesday announced plans to nearly halve the amount of duty-free steel imports, to 18.3 million tonnes per year, while sharply increasing levies on foreign steel falling outside of set quotas to 50%. The new regime, which is set to replace existing steel safeguards due to expire in June next year, would apply to all the bloc’s trading partners, with the exception of Iceland, Norway, Liechtenstein, and, to a certain extent, Ukraine.
The pivot comes as the European steel industry has been crying foul over fierce competition from China and elsewhere, which, coupled with high energy prices, raw material shortages, and sluggish domestic demand, have pushed local production down from 200 million tonnes in 2007 to around 140 million tonnes in 2023, according to European steel lobby group Eurofer. As a result, the industry has shed nearly 100,000 jobs over the past 15 years.
“When every country shuts its doors, the last one open gets flooded,” Stanislav Zinchenko, who runs an independent consultancy that advises iron and steel firms, said of the EU. He called Brussels’ decision "inevitable” given rising trade barriers across the globe.
In a protectionist domino effect, accelerated by President Donald Trump since his return to office at the start of this year, major economies have been steadily tightening their trade defences over the past few months. Beyond the US, India has introduced a temporary 12% levy on Chinese imports; Canada has rolled out a quota system; and Turkey has launched a series of anti-dumping investigations.
“This is not something the EU really wants to do, but political realities have compelled the Commission to put it forward,” Aslak Berg, a research fellow at the Centre for European Reform, told The Parliament.
EU's protectionist mode on
Brussels’ move reflects a new sense of urgency in protecting its economic security, amid mounting global economic uncertainty.
Maroš Šefčovič, the European Commissioner for trade, warned Tuesday that the damage on domestic steelmakers is accelerating so quickly that “if we wouldn’t act, within a few years we wouldn’t be able to provide key steel supplies for European industry.” According to Eurofer, imports of steel from China rose by 42% in the first three months of 2025, followed by South Korea, Turkey and Vietnam.
The EU relies on steel for everything from car manufacturing and construction to defence. And the new tariff regime should help “restore the balance to the EU steel market,” Šefčovič argued.
European steel producers have faced worsening conditions since the US imposed a sweeping 50% tariff in May. A EU-US trade deal agreed in July — which would set a baseline tariff of 15% on most EU goods — was meant to establish a new quota system for European steel exported to the US, but talks have since stalled on that aspect of the pact.
For many experts, Brussels’ move heralds a new era for European trade. “If you look at the bigger picture, the EU is choosing to go beyond traditional trade defence instruments and adopt a more sectoral approach to protecting its strategic industries from Chinese overcapacity,” said Juliana Bouchaud, a senior analyst at the Rhodium Group think tank.
The term “overcapacity” is usually used to refer to excess production supported by state subsidies.
A Trump-like tariff move?
Still, many observers were quick to compare the EU’s announcement to Trump’s universal tariffs imposed earlier this year, suggesting the Commission was being hypocritical. But EU officials were adamant that their approach had little to do with Trump’s forceful trade crusade and was, rather, in full compliance with the global rules-based system.
“First and foremost, we’re not closing our market with upfront 50% tariffs,” insisted Šefčovič, noting that, unlike Washington, the EU will only apply tariffs to a limited range of products — namely steel. Second, he flagged that the proposal stopped short of tabling exact figures, arguing that import quotas would need to be agreed upon in consultation with its trading partners.
“The EU is having to grapple with completely new geopolitical and market realities and try to find ways to act while claiming a semblance of WTO compliance,” said Rhodium Group’s Bouchaud. In short, Brussels hopes to engage in talks to renegotiate tariffs with its trading partners through the World Trade Organization, rather than going down a retaliatory path.
To Berg of the Centre for European Reform, the new regime is nonetheless "borderline." He added: “They’re stretching the letter of WTO law to the breaking point.”
Trade war winners and losers
Countries in the European Economic Area that are not part of the EU — Iceland, Lichtenstein and Norway — all secured a full exemption from the EU’s tougher trade regime.
At the opposite end of the spectrum is China — Brussels’ ultimate target. The proposal would tie new import quotas to 2013 levels, before China’s excess steel capacity flooded the market.
The new measures could “be something that makes China quite nervous in terms of its export performance going ahead,” Bouchaud said. In 2024, China exported the equivalent of €3.5 billion in steel to the bloc, according to data from Eurostat
Bouchaud also noted that Brussels should brace itself for aggressive retaliation from Beijing, recalling that China reacted to the EU’s anti-dumping investigation into electric vehicles by targeting the bloc on three fronts — dairy, brandy and pork.
In a statement posted by the Chinese Chamber of Commerce to the EU, Bejing called the EU’s move this week “a protectionist step that could generate significant challenging spillover effects across downstream industries.” The new steel trade regime, the statement continued, “signals a worrying rise in trade protectionism within the EU market.”
Separately, the UK, which sells nearly 80% of all its steel exports to the EU, is also in the firing line. The director general of lobbying group UK Steel, Gareth Stace, warned this week of a “potential disaster” should London fail to negotiate enough quotas for its producers with Brussels.
Meanwhile, Ukraine is set to receive special dispensation, given its status as an EU candidate country and the “exceptional and immediate security situation” it is facing, in a move that could shield the war-torn nation from levies that would have hit hard. The EU buys the vast majority of Ukraine’s steel exports.
The Commission’s intervention in the steel market is unlikely to be an isolated case, with experts suggesting that chemicals, aluminium and the automotive sector could be next in line. Indeed, Šefčovič acknowledged that the EU is reviewing other sectors “most affected by trade volatility,” while noting that “if there's the need, we’ll be acting also on other sectors.”
What’s clear, Zinchenko said, is that protectionism and trade barriers will “only keep rising.”
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