The European Commission has unveiled sweeping measures to shield the EU’s struggling steel industry from a flood of overcapacity that it says is emanating from China, slashing tariff-free quotas by nearly half and doubling duties on excess shipments to 50 per cent.
To take effect, the plan must be approved by the European Parliament and the European Council, which is made up of the bloc’s 27 member states, and would replace an existing system of safeguards due to expire in June 2026.
The proposal does not name China, and tariffs and quotas would apply to global imports. Countries would have a chance to negotiate lower rates at the World Trade Organisation, a measure the commission says makes the gambit compliant with the Geneva body’s rules.
Nonetheless, officials involved in the process said China was by far “the biggest problem” and that its steel overcapacity issue had been getting worse rather than better.
“With China, we have been discussing this question of overcapacities for a very long time,” said a senior EU official who was not permitted to be named.
“With this proposal, we are again reiterating the invitation to have a serious conversation about that,” the official continued. “To be very honest, for the time being – regardless of what the Chinese authorities have been saying – we don’t see that this problem of overcapacities is going away.”
“On the contrary, we see that it is worsening,” the official said, adding that China was “the main [country] responsible for this situation of overcapacity”.
In a bid to tackle steel that may be of Chinese origin but finished and exported from other markets, including Southeast Asia, the commission further proposed a “melt and pour requirement” to prevent circumvention.
“Requesting evidence of the country of ‘melt and pour’” would prevent steel produced in certain countries contributing to global overcapacity from unduly entering the union’s market “following further transformation in other countries, and will increase transparency in the domestic supply chain for steel imports”, according to the proposal.
Furthermore, at a press conference on Tuesday, EU trade commissioner Maros Sefcovic hinted that more investigations into China’s trade practices are on the way.
“We are, of course, looking at other sectors that are most affected by trade volatility and if need be, we would be acting also in other sectors,” Sefcovic said.
“I want to assure everyone we are not taking this decision lightly. We are for free and fair trade. We are for a balanced relationship. But if our economy is affected by global overcapacity, which is often funded by illegal subsidies or not transparent trade flows, then we have to act.”
Despite the parallels with US trade tariffs, EU leaders have denied that the bloc is mimicking US President Donald Trump’s policies.
“We’re not doing Trump-style politics ... the European steel industry was on the verge of collapse,” said Stéphane Séjourné, the EU’s industry chief. “We are protecting it so that it can invest, decarbonise and become competitive again.”
Speaking alongside Sefcovic on Tuesday, Séjourné denied that the bloc was adding to a “new era of protectionism”, in response to complaints from Chinese businesses in Europe.
“We don’t like tariffs and tariff-led industrial policy... I don’t think it’s the commission being protectionist, it is the others which are closing off and we have to protect our own sovereignty, and our jobs,” the French commissioner said.
On the other hand, the European Union hopes that adopting these tariffs would help it negotiate a reprieve from America’s 50 per cent tariffs on steel imports.
“The approach of the US is towards tackling global overcapacity and protecting the steel industry,” Sefcovic said.
“I hope we are clearly pointing out that we are taking on the challenge of global overcapacities ourselves as well and that it would be much more efficient if we do it together,” he continued.
Sefcovic said he hoped these tariffs would “help us start the discussion on ringfencing” EU and US steel, therefore reducing American duties on European products.
The EU’s measures are aimed at cutting its overall imports of steel by 47 per cent on 2024 rates.
Brussels wants to boost capacity utilisation from 67 per cent to 80 per cent across the union’s steelmaking sector, for which it has reported 100,000 job losses since 2007, with record lay-offs in 2024.
The push comes as Europe seeks to double down on self-sufficiency in several steel-reliant industries, not least defence.
As it looks to rearm in the face of Russian aggression and the expected eventual removal of America’s security blanket, its parlous industrial situation has led to an increased appetite for protectionist measures.
Yet the move would add to the EU’s trade tensions with Beijing, which have been simmering in recent years.
A year ago, the bloc slapped anti-subsidy duties on Chinese imports of electric vehicles, prompting Beijing to open anti-dumping investigations into EU-made pork, dairy and brandy.
In 2024, a record 20 trade investigations in the EU opened against Beijing. And although the pace has slowed to just eight through 2025, there is an ample pipeline.
Former EU trade commissioner Cecilia Malmström recently said there were 20 China-related anti-dumping investigations ready to proceed.
But it was understood that commission resources were stretched, with months-long waiting lists for cases to be considered.
“Global overcapacity is damaging our industry. We need to act now,” European Commission President Ursula von der Leyen said on Tuesday.
“I urge the council and parliament to move ahead quickly,” she added. “The commission will continue working with industry to protect and create good jobs, and with member states and global partners, including at WTO level, to find long-term solutions to shared challenges.” - SOUTH CHINA MORNING POST
