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EU to Propose Doubling Tariff Rate on Steel Imports to 50%

(Bloomberg) -- The European Union plans to hike tariffs on its steel imports to 50%, according to a draft proposal seen by Bloomberg. The move will align the bloc’s rate with the US, which has sought to push back against overcapacity from China.

The EU currently has a temporary mechanism in place to safeguard its steel industry, which imposes a 25% duty on most imports once quotas are exhausted. That mechanism expires in June and the EU has been working to replace it with a more permanent regulation, which it plans to unveil next week.

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The European Commission, which handles trade matters for the EU, plans to boost the tariff rate to 50% “to minimize the risk of trade diversion,” according to the draft. The higher rate would apply to imports once a certain quota is reached.

The plans outline quotas for specific product types based on historical averages. The commission is also seeking powers to set out country-specific quotas for the various thresholds.

The measures would be reviewed every five years from July 2031 to evaluate overcapacity trends and their effects on the steel market, according to the proposal.

The bloc’s steel industry has faced a severe crisis in recent years as it grapples with cheap imports from China and other Asian economies. Furthermore, US President Donald Trump increased tariffs on steel and aluminum imports to 50% shortly after taking office.

The EU’s industry chief, Stephane Sejourne, told a closed door meeting Wednesday that the commission was planning to unveil its proposal to boost steel tariffs next week, according to a person familiar with his remarks.

He said that while the EU continues to believe in an international order where trade is possible, “we will not be the only ones to impose on ourselves the principles that others no longer apply,” according to the person familiar with his remarks.

Europe’s steel association, Eurofer, has been demanding tighter measures to reflect new market dynamics and requested a comprehensive post-safeguard trade regime after 2026 to address the destructive spillover effects of global steel excess capacity on the EU market.

“If there are no strong barriers to ship in steel at below-cost into Europe, the main elements of European prosperity like cars, trucks, batteries and wind turbines, will not be able to be produced with our own steel,” said Henrik Adam, chief executive officer of Tata Steel Europe. “The commission has understood the risk and is now taking action soon on trade.”

--With assistance from John Ainger and Mark Burton.

(Updates with a comment from Tata Steel executive in the final paragraph.)