On February 10, Trump’s administration announced a decision to impose tariffs on steel imports at a rate of 25%, as was first done in 2018, during Trump’s first term as US president. This would eliminate previous exemptions and tariff-rate quotas for the EU and UK, with the new tariff rate to take effect on March 12.
The US tried to justify the higher tariff by citing rising steel import volumes from the EU and UK, whose share of the US import sector increased to 20.7% in 2024 from 18.6% in 2020.
The US also expressed concerns that alternative trade agreements signed in 2021-22 have failed to address global overcapacity, particularly in China, and have allowed unfairly priced steel to enter the US market through regions such as the EU and the UK. These trade agreements were intended to replace the original 25% tariffs under the US Section 232 trade regulations, with a tariff rate-quota system.
European Commission President Ursula von der Leyen has condemned the US tariff decision, warning that the bloc will respond with “firm and proportionate counter-measures.”
“I deeply regret the US decision to impose tariffs on European steel and aluminium exports,” she said on February 11. “Tariffs are taxes – bad for business, worse for consumers… The EU will act to safeguard its economic interests. We will protect our workers, businesses and consumers.”
The UK steel sector also responded with deep concern, emphasizing the economic damage that could result from the US move. The UK exports around 200,000 tonnes per year of steel to the US, worth more than £400 million ($495 million), and the 25% tariff could severely disrupt that trade flow.
The director-general of industry body UK Steel, Gareth Stace, said that the US action would stifle UK exports and damage the UK’s balance of trade, at a time when global protectionism was on the rise.
“The US is our second-largest export market after the EU, and this move threatens more than £400 million of steel exports [each year],” Stace said. He added that the UK’s high-quality steel products were essential to key US sectors such as defense and aerospace.
Concerns about trade diversion
The imposition of US tariffs at the new higher rates was expected to lead to trade diversion, with steel products flooding toward other markets, including the UK, undermining local steelmakers and distorting competition.
The UK steel industry was especially worried about the scheduled expiration of Steel Safeguard measures in 2026, which have shielded the UK from a surge in cheap imports.
“The UK must act decisively to protect our domestic industry from the fallout of rising global protectionism,” Stace said. He called for an acceleration of the adoption of the UK Carbon Border Adjustment Mechanism (CBAM) to 2026, to provide further protection against unfairly priced steel imports.
European steel association Eurofer expressed similar concerns. “In 2024, the US imported about 23 million tonnes of steel products from third countries other than the EU. These volumes are now likely to be massively diverted into the European market,” Eurofer said on February 11.
The US tariffs will probably lead to greater global trade imbalances, with steel that would have been shipped to the US going instead to European markets. The EU was already contending with cheap steel imports, primarily from Asia, North Africa and the Middle East, and the US decision could exacerbate this situation, further damaging the European steel sector.
At the same time, however, some market sources suggested that the European steel market was better protected against imports from third countries, on account of the steel safeguard measures that were currently under review.
“It’s not 2018 [when import tariffs on steel under Section 232 were first introduced]. And in April, steel safeguards [in the EU] will be even tougher, so I don’t think we need to worry about trade diversion,” a steel service center in Germany said.
The EU’s existing steel safeguard measures were first implemented in 2018 as a response to the unilateral US decision to impose import tariffs of 25% on steel and 10% on aluminium from Canada, Mexico and the EU.
The EU’s measures have been extended several times, and were currently subject to a review that was expected to be concluded by March 31, with any adjustments to the current measures to come into force the following month.
Other market sources, however, expressed concern about the potential wider effects of tariffs and their possible extension to downstream sectors.
“For example,” a mill source said, “if China delivers components for wind towers to the US, those products are subject to duty, because those towers are made of heavy plate, which is subject to duty in the US. If tariffs were to be extended to downstream steel products, there might be more serious consequences for the EU economy.”
Eurofer’s response
The US decision has drawn sharp criticism from Eurofer president Dr Henrik Adam, who called it a “radical escalation” of a trade conflict that was initially sparked under the previous Trump administration.
Adam warned that the new tariffs would have a devastating effect on the European steel industry, potentially leading to the loss of as much as 3.7 million tonnes per year of steel exports to the US. This would have significant consequences for an industry that was already struggling with low demand and rising global steel overcapacity.
“The US is the second-largest export market for EU steel producers, representing 16% of total EU steel exports in 2024,” Adam said on February 11. “Losing such a significant portion of exports cannot be compensated by other markets.”
Total iron and steel exports from the EU in January-November 2024 amounted to 15.88 million tonnes, according to Global Trade Tracker (GTT). Of that amount, deliveries to the US totalled 3.6 million tonnes.
European steel already in crisis
The EU steel industry was already in crisis, having been forced to close 9 million tpy of capacity in 2024, while also announcing 18,000 job cuts.
The effect of the new tariffs would further strain an industry that was already dealing with reduced margins, falling demand and rising costs.
Adam emphasized that the new tariffs would only accelerate the decline of European steel production, potentially leading to the closure of even more steel mills in the foreseeable future.
“The EU safeguard regime needs urgent revision to address these new challenges,” Adam said. “Without tightening the current quota system, the deflection caused by these tariffs will push EU steel capacity into further idling, and ultimately to closures.”
Both the UK and the EU were now pushing for stronger trade protections and immediate negotiations with the US to minimize the effects on their steel industries. EU leaders were prepared to use counter-measures, and the UK government was under pressure to shield its market from the unwelcome results of the new tariffs.
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