The European steel industry is sounding the alarm as delays in finalizing an EU-US trade agreement are exacerbating an already severe crisis. The European Steel Association (EUROFER) warns that US steel tariffs at 50 percent could completely block EU access to its third-largest export market, endangering over 3.8 million mt of tariff-free EU steel exports. Noting that the new US tariffs also cause risks of a surge in deflected trade flows redirected from the US to the EU market, the association stated that the lack of timely implementations of the Steel and Metals Action Plan, which is expected in September, the new “highly effective trade measure” to replace the current safeguard, to be implemented by December, and a proposal to close major loopholes in the Carbon Boarder Adjustment Mechanism (CBAM) are further accelerating the sector’s deterioration.
Current crisis: steel deflection and market collapse
Emphasizing the urgent need for a coordinated EU-US approach to preserve export flows and counter the surge in steel being rerouted from the US into the EU, Dr. Henrik Adam, EUROFER president, said, “We cannot continue with 50 percent US tariffs. As we lose our major export market, the European market is being flooded by the steel the US is no longer absorbing. We are particularly disappointed by the absence of a joint EU-US approach preserving EU steel exports to the US and tackling trade diversion towards the EU on top of massive global overcapacity - now five times larger than the EU’s total steel production. This glut is destroying entire value chains, undermining industrial resilience, defense capabilities and the green transition.”
Sharp contrasts: US investment vs EU decline
According to Mr. Adam, the US steel industry is booming thanks to policies like Buy American, lower energy costs, and green subsidies, while the EU is reeling. US producers have added 8-9 million mt of new capacity, driven by protectionist policies and increased tariffs, while the EU lost 10 million mt of steel capacity in 2024, the largest single-year decline in history. “The game changer for a business case in Europe is not there yet. If these key measures on trade and CBAM are addressed by the European Commission as half-heartedly as energy prices, we will inevitably continue to see more capacity closures, job losses, and stalled decarbonization projects. If that happens, there will only be losers: EU steel producers wiped out by cheap, carbon-intensive imports, and an EU transition and climate ambition that falter without solid industrial foundations,” concluded Mr. Adam.