EU Proposes Higher Tariffs and Lower Quotas on Steel Imports, and Plans to Renegotiate its WTO Tariff Commitments

On 7 October, the European Commission unveiled a new proposal to overhaul the European Union’s (EU) steel import policy, reportedly aimed at addressing global overcapacity and strengthening the resilience of the European steel sector. The proposal will replace the EU’s current steel safeguard measures that have been in place since 2018 and that expire in June 2026, pursuant to World Trade Organization (“WTO”) rules. The proposal reflects the EU’s growing willingness to protect its own steel industry amidst similar measures having been taken globally.

Background

Imports of steel into the EU have been subject to safeguard measures since 2018, including a 25% tariff on imports above a set quota. The safeguard measures were adopted soon after the United States imposed a 25% tariff on its steel imports pursuant to section 232 of the U.S. Trade Expansion Act of 1962, as the EU feared that steel capacity originally intended for the United States would be diverted to the EU. Since adopting the measures in 2018, the EU has extended them twice. The current safeguard measures will expire in June 2026 and may not be further extended under WTO rules, prompting the EU to look for a new approach.

The European Commission launched a targeted consultation to help identify future measures to continue safeguarding the EU steel sector in July 2025. The Commission concluded that the new steel measures are necessary due to alleged overcapacity in the global steel market and that the quota volumes will match 2013 levels, the time period when it says overcapacity allegedly began. The new measures are also said to align with the broader EU Steel and Metal Action Plan and, according to the Commission, with US trade polices as the two regions continue trade negotiations.

Overview of the New EU Steel Import Policy

The Commission’s proposal introduces several key changes from the current safeguard measures:

• Quota Reduction: As of July 2026, tariff-free steel imports would be capped at 18.3 million tons annually, a 47% reduction from the 2024 quota. Tariff quotas will be allocated per product category based on the share of imports that each product category held in the period 2022-2024. Tariff quotas will be administered on a quarterly basis without carryover.
• Tariff Increase: Imports exceeding the quota would face a 50% duty, up from the current 25%.
• Traceability Requirement: New rules to report the country of the melt and pour would be established to prevent circumvention of import regulations.

Product and Geographic Scope

The proposed measures will apply to imports of all 26 grades of steel currently subject to the EU’s steel safeguards. The Commission will assess the need to amend the product scope every two years.

The measure will apply to imports from all sources, except Norway, Iceland and Lichtenstein as European Economic Area (EEA) members. Imports from other FTA partners will not be exempt from the new policy.

WTO and FTA Obligations

The EU maintains that new policy will uphold open markets by offering quota allocations to trading partners. However, the size of the quotas allocated to trading partners has not been publicly disclosed. Moreover, the EU appears to acknowledge that the new tariffs would exceed its tariffs commitments at the WTO. To resolve this potential incompatibility, the proposal includes plans to initiate negotiations in the WTO under the General Agreement on Tariffs and Trade (GATT) Article XXVIII. This provision allows a WTO member to modify or withdraw a tariff commitment by offering compensation to other WTO members that are affected by the modification. This element of the Commission’s proposal will be addressed in more detail in a future alert.

As regards free trade agreements (FTAs), the proposal states that FTA partner status will be considered in quota allocation. It also contemplates the potential application of bilateral safeguards measures under the FTAs. The bilateral safeguards purportedly would eventually replace the 50% tariff imposed under the proposed policy.

Potential Implications

The proposed measures are expected to have significant effects on various stakeholders:

• Trade Partners: Countries such as the United Kingdom and Switzerland have described this as a crisis moment for their own steel industries as a majority of their countries’ respective steel exports are to the EU. In addition, based on safeguard quota usage data in the EU from July to September 2025 for major steel products such as hot-rolled coil (HRC), cold-rolled coil (CRC) and hot-dipped galvanized coil (HDG), a 47% reduction in the steel safeguards will have a significant impact on the EU’s trading partners. For HRC, suppliers such as Turkey, South Korea, and Taiwan fully exhausted their allocated quotas in the EU between July and September 2025. For CRC imports, Turkey, South Korea, Vietnam, Taiwan and Japan used between 91% and 100% of their allowances. Finally, Turkey, Vietnam, Taiwan and China all used between 99% and 100% of their steel safeguard allowances for HDG.
• Industry: The European steel industry views the measures as necessary to counteract lower priced imports and to support the sector amid high energy costs and stricter environmental standards. On the other hand, users of steel may be affected by higher prices.
• International Cooperation: The proposal aims to foster dialogue with the United States and other partners, encouraging reciprocal approaches and collective solutions to global overcapacity. It also enables bilateral negotiations for country-specific quotas and compensation.

Possible Club?

The proposal might suggest that the EU is reviving the idea of forming a possible club of like-minded countries that would coordinate efforts to address global steel overcapacity, seeking to “ring-fence” their domestic markets while maintaining secure supply chains amongst themselves—a concept that was considered in the context of the negotiations with the U.S. under the Global Arrangement on Sustainable Steel and Aluminum, under the Biden administration. When discussing the recent import measures, European Trade Commissioner Maroš Šefčovič emphasized the importance of working together with other countries such as the United States on addressing overcapacity in the steel market while also differentiating between their current approaches. As yet, it is unclear how the current US administration will respond to the EU’s proposal.

Next Steps

The proposal will proceed through the EU’s ordinary legislative process, requiring approval from both the Council and Parliament. This process may take several months, especially in the event of amendments to the original proposal. As the chair of the Council, the Danish Presidency will take the lead in facilitating negotiations for the proposal with Cyprus taking over in January 2026. In the Parliament, the Committee on International Trade (INTA) will take the lead. The Commission will be responsible for quota allocations. Engagement at international forums, such as the Global Forum on Steel Excess Capacity and G20 meetings, is also likely to continue. Once adopted, the policy would be reviewed every five years.