MEPS Analysis: EU proposes steep tariff increases and quota cuts

by David Fleschen

The European Commission has unveiled a sweeping overhaul of its trade defence measures for steel, proposing a near-doubling of import tariffs and a 47% cut in tariff-free quotas, according to an in-depth analysis by MEPS International. If approved, the new system would take effect on July 1, 2026, and remain in place until July 2031, with a scheduled interim review in 2027.

At a press conference on October 7, Executive Vice-President Stéphane Séjourné and Commissioner Maroš Šefčovič presented the proposed framework, which replaces the current safeguard measures and aligns the EU’s steel policy more closely with recent US and Canadian trade defence actions.

Key elements of the proposed EU framework

As reported by MEPS, the new system includes the following core changes:

  • Reduction of tariff-free import quotas from 33 million to 18 million tonnes annually — a 47% cut, limiting non-EU steel to 13% of market share

  • Increase in over-quota tariff rate from 25% to 50%

  • Mandatory disclosure of “melt and pour” origins for third-country steel

  • Abolition of quota rollovers, eliminating the current flexibility between quarters

  • Potential expansion of the product scope to include additional steel and derivative goods

Country-specific quota allocations are yet to be finalised. All current safeguard product categories would see both reduced import ceilings and higher tariffs, while new derivative categories could be added later.

The Commission frames the shift as a necessary defence against global overcapacity, which is forecast to reach 721 million tonnes by 2027, five times the EU’s annual steel consumption.

Diplomatic and legal complexities ahead

Although Séjourné stressed that the measures remain WTO-compliant, MEPS analysts note that reclassifying the policy from a safeguard to a permanent trade defence instrument alters the EU’s legal position. This change could trigger retaliatory action from trading partners and introduces a diplomatic hurdle, as unanimous approval by all 27 EU member states is required.

Furthermore, such reclassification means the EU may no longer be exempt from countermeasures by other countries, potentially putting EU steel exports at risk just as CBAM implementation begins to reshape global trade dynamics.

Industry response and market outlook

Commenting on the announcement, Jon Carruthers-Green, steel market analyst at MEPS, stated: “After months of speculation, the industry finally has some clarity on what will replace the EU’s safeguard measures. That said, a great deal of detail — including country-level quota breakdowns — is still pending.”

He added: “With CBAM also entering its definitive phase, the market is in flux. Some producers may seize the opportunity to lift prices, but sluggish end-user demand could make it difficult for those increases to stick.”

According to MEPS, the European Steel Association (Eurofer) welcomed the proposal as a “major leap forward to save EU steel” and called for urgent approval to allow implementation by early 2026.

Meanwhile, the European steel import and distribution association Eurometal is lobbying for an extension of the new framework to cover a broader range of steel-containing finished products, arguing that many such items currently escape both safeguard measures and CBAM, leading to unfair competition.

Transatlantic cooperation on steel defence

The EU’s proposal comes as Brussels and Washington explore closer alignment of their trade defence policies. Under their July trade agreement, both parties pledged to insulate domestic industries from global overcapacity, with discussions ongoing about shared tariff-rate quota systems for steel, aluminium, and derivative goods — potentially offering an alternative to the current 50% US Section 232 tariff.

The Commission is expected to publish more detailed regulations and quota tables in the coming months, followed by a stakeholder consultation period. Final approval by both the European Parliament and Council of Ministers will be required before the system can enter into force.

Source: MEPS, Photo: Fotolia