The European steel industry continues to face mounting pressure from weak demand, persistent global overcapacity and rising protectionism worldwide. According to OECD estimates, global excess steel capacity could exceed 720 million tonnes by 2027 around five times of total EU steel production. At the same time, global demand growth remains subdued, intensifying competition for export markets.

As countries increasingly protect their domestic industries, trade diversion pressures are building towards the few major markets that remain relatively open, notably the European Union. The situation worsened in 2025 when the United States increased tariffs on steel imports to 50%, restricting access to one of the world’s largest steel markets: Since the imposition of the 50% tariff (June 25), EU steel exports have decreased by more than 40% and more export loss is expected. Moreover, downstream steel-containing goods (derivatives) also became subject to Section 232 measures, while other economies introduced new import restrictions and safeguard measures, increasing the risk of further import surges into Europe.

The EU’s safeguard regime introduced in 2018 and expiring on 30 June 2026, was an important safety net against the surges. However, while EU steel demand sharply declined, safeguard quotas continued to expand automatically, weakening the instrument’s ability to stabilise the market and maintain viable capacity utilisation levels.

On 1th July, a new steel trade measure will apply decisively tackling the destructive impact of global excess capacity on the European industry. Protecting and promoting EU steel capacities. This measure exemplifies the historic shift undergoing in European industrial and trade policy securing industrial value chains and European industrial and economic resilience 

Replacing the steel safeguard regime, the new measure introduces a reinforced tariff-rate quota (TRQ) system significantly reducing imports through lower tariff-free quotas  (-47%) and a higher tariff (+50%) above quota combined with enhanced monitoring and anti-circumvention functions. Unlike previous trade defence actions, this highly ambitious measure will effectively protect and promote a strategic industry by establishing import levels that will secure the viability of European capacities and support de-carbonisation.  Despite this stronger measure, the EU will remain one of the world's major open steel markets, with around 18 million tonnes of steel imports continuing to enter tariff-free each year.

To secure the steel value chain, tackling import disruption upstream where the basic steel capacities and production are situated is a critical but first step: where steel-using industries – the steel demand side - are equally impacted by disrupting import surges of steel-containing goods, an expansion of the trade measure downstream needs to be considered. This step is foreseen and EUROFER will fully support downstream sectors that are mostly concerned.  

Finally, this measure is unilateral but addressing the root causes of global excess capacities needs coordinated actions by like-minded steel trade partners covering a critical mass of the world market and industry. EUROFER considers TRQ’s an adequate type of trade measure capable of imposing effective import restrictions at the same time avoiding the imposition of a direct cost burden on downstream industrial sectors.

This proposal is a recognition that steel is a strategic industry for Europe essential for economic growth, industrial resilience, defence capabilities, clean technology and the energy transition.

This comes at a critical moment.

"Over the past five years, the EU steel industry has lost more than 30 million tonnes of production capacity and around 30,000 direct jobs."

Capacity utilisation reached historically low levels in 2024, undermining profitability and reducing the industry’s ability to invest in low-carbon technologies.

At the same time, European steelmakers are expected to deliver one of the world’s most ambitious industrial decarbonisation transitions, requiring massive investments in hydrogen-based production, electrification and recycling technologies. Without a viable economic environment, these investments will become increasingly difficult to sustain.

Despite difficult market conditions, companies across Europe are developing new low-carbon production technologies while improving efficiency and strengthening recycling capacities.

In April 2026, the European Parliament, the Council and the Commission reached an agreement on a new steel trade measure which replaces the safeguard regime. Industry welcomed the agreement as a necessary step to prevent further deterioration of the European steel market.

However, the new trade measure should not be viewed as the end of the discussion, but rather the beginning of a broader effort to preserve a resilient European steel value chain.

Additional action remain necessary.

The industry is calling for stronger monitoring and enforcement tools, including “melted and poured” rules of origin to improve traceability and prevent circumvention. At the same time, as trade diversion increasingly shifts downstream along the value chain, additional attention will be required for steel-intensive downstream products. Expanding the scope of the measure to downstream sectors will become increasingly important to avoid the displacement of distortions from upstream steel products to processed goods.

At the same time, traditional Trade Defence Instruments (TDIs) - anti-dumping and anti-subsidy measures - remain indispensable. While the new trade measure addresses the spillover effects of global overcapacity, TDIs continue to play a critical role in tackling specific cases of unfair trade practices and market distortions.

Attention will now turn to the effective implementation and enforcement: monitoring import developments, ensuring the effectiveness of quota management, preventing circumvention and assessing whether further action is required in downstream sectors.

At the international level, the EU steel industry also supports the ongoing discussions within the Global Forum on Steel Capacity (GFSEC), aimed at addressing the root causes of global overcapacity through greater transparency, international cooperation and market-oriented policies. While trade measures remain necessary to address the immediate spillover effects of global overcapacity on the EU market, a long-term solution ultimately requires coordinated international action.