Orgalim, representing Europe’s technology industries, has issued a strong warning against the European Commission’s newly proposed steel trade regulation, arguing that the measure would trigger severe cost increases for downstream manufacturers. The organization stated that the draft regulation, introduced to counter global overcapacity pressures in the steel sector, risks inflicting major economic damage on EU steel-using industries by restricting access to essential materials and raising administrative and tariff burdens.
According to Orgalim, the new proposal aims to support EU steel producers but would put strain on small and medium-sized enterprises. The organization warned that the measure comes at a time when Europe’s technology industries are already experiencing downturns, including a 5.6 percent decline in turnover, a 1.2 percent drop in employment, and a 3.2 percent reduction in investments in 2024.
Orgalim noted that existing steel safeguard measures, in place since 2018, already pose challenges by limiting access to competitively priced steel, constraining availability of specialized grades, and increasing administrative demands on importers. These conditions have contributed to average EU iron and steel prices rising by more than 40 percent since the introduction of provisional safeguards.
Key elements of the new regulation
The proposed regulation was described by Orgalim as “far more restrictive” than the safeguards currently in force. It includes a 47 percent cut in total import-quota volumes, a doubling of the out-of-quota tariff from 25 percent to 50 percent, and the elimination of the carry-over mechanism for unused quotas. The draft also introduces a mandatory “melted and poured” origin-verification requirement, which Orgalim warns would significantly increase documentation and compliance pressure for importers.
Cost impact: out-of-quota tariffs could surge by up to 1,200%
Orgalim’s analysis suggests that, with the new measures in place, annual out-of-quota tariff costs could reach €5.4 billion, a 660 percent increase compared with the estimated €700 million paid in 2024. Under more realistic assumptions, such as importers being able to use only half of their quota allocations, the costs could rise further to €9.3 billion, representing a 1,200 percent increase.
The organization also predicted that reduced import competition would lead to additional domestic price increases, further raising costs for downstream sectors already struggling with high energy prices, supply-chain disruptions, and weakened demand.
Cumulative burden from other EU policies
Orgalim stressed that the impact of the proposal cannot be viewed in isolation. At the same time, downstream industries are facing major regulatory shifts through the Carbon Border Adjustment Mechanism (CBAM), the phase-out of free ETS allowances, and new sustainability obligations under the upcoming Ecodesign for Sustainable Products Regulation (ESPR) Delegated Act on steel.
According to Orgalim, the European Commission’s impact assessment fails to fully capture the combined cumulative burden of these parallel measures, significantly underestimating the risks for downstream competitiveness.
Orgalim’s proposed amendments and call for a multilateral approach
To mitigate the negative impact if the regulation moves forward, Orgalim has proposed eight key amendments designed to maintain industrial competitiveness, ensure access to essential steel grades, and reduce administrative pressure.
These include exempting critical product categories, maintaining the 25 percent tariff, setting adequate quotas where EU production is insufficient, avoiding disruptions to UK and Swiss supply chains, administering quotas annually, reinstating carry-over, simplifying “melted and poured” rules, and conducting annual evaluations of the regulation’s effects.
Orgalim concluded by urging EU policymakers to halt the current proposal and instead adopt a plurilateral approach with like-minded partner countries. The organization argued that coordinated action through aligned tariffs, quotas, and carbon-pricing frameworks is the only effective way to address global steel overcapacity without imposing disproportionate harm on Europe’s technology industries. Without major changes, Orgalim warned the proposal will cause “lasting harm”, undermining competitiveness, innovation and industrial employment across Europe.