EU steel protectionism is hurting Europe's own manufacturers

The EU says it stands for free trade.

Yet over the past few years it has introduced tariffs, quotas and carbon levies that have made steel considerably more expensive for European companies. The aim is to protect Europe’s steel industry. The cost, however, is borne by a far larger group: the companies that use steel as a raw material.

As an importer of stainless steel products, I see this first-hand. Our costs for duties and other import charges have risen by several hundred per cent in recent years. We do not have the margins to absorb that. Our customers pay the price.

Over the same period, EU trade policy has taken on an increasingly protectionist character. Nowhere is this clearer than in steel, where imports have been subject to ever tighter restrictions since 2018:

Import quotas by product category and country of origin, with a 25% tariff on volumes above quota

• Anti-dumping duties on products from China in particular, but also from Taiwan, India, Turkey and other origins

• CBAM, the EU’s Carbon Border Adjustment Mechanism

• Stricter rules from July 2026, with sharply reduced quotas and the out-of-quota tariff doubled to 50%

The stated reasons are global overcapacity in steel, the need to protect EU steelmaking (including on strategic grounds), and environmental concerns. These arguments have merit. What they overlook is the biggest problem with import restrictions: they hit Europe’s steel consumers disproportionately.

Who pays?

If the purpose of a measure is to shield producers from competition, customers will inevitably pay more. Less imported material is available, and European producers gain room to raise their prices.

The customers in this case are every company that uses steel: engineering, automotive, household appliances, furniture and many more. Higher raw material costs weaken their competitiveness. On top of that, many of them compete with Chinese finished goods made from inexpensive steel, which can enter the EU market without equivalent duties or CBAM charges – at least for now. The EU has proposed extending CBAM to downstream products, but not before 2028. Until then, EU trade policy is making a rod for its own back.

46 to 1

Steel-using industries employ around 13.6 million people in the EU. The steelmakers being protected from competition employ around 293,000. That is roughly 46 jobs in steel-consuming companies for every job in steel production (figures from Eurofer and Eurometal).

Yet EU trade policy appears to weigh the interests of 293,000 steelworkers more heavily than those of 13.6 million people further down the value chain. Why?

One reason may be that the EU has a limited number of steel producers, each a major employer in its local community. When a steelworks is threatened with closure, it is visible immediately: thousands of jobs in a single town, headlines, union protests. When tens of thousands of steel-using companies face higher costs, it barely registers. Steelmakers also have a very strong lobbying organisation in Eurofer – arguably one of the most effective in Europe. Steel consumers are spread across many different industries and far less organised.

Not only China

China rarely attracts sympathy, and there is considerable evidence of unfair industrial subsidies. What is seldom mentioned is that Taiwan – small, democratic and market-based – is among the countries hit hardest by EU tariffs and quotas. Much of the stainless steel we import comes from Taiwan, which is why our costs have risen as they have.

Finding the right balance

No one disputes that Europe needs a viable steel industry. The question is whether current policy has found the right balance. When raw material is made more expensive for Europe’s own manufacturers, while imported finished goods can often be sold on the European market without a corresponding burden, EU industrial policy contradicts itself.

A better balance would start with three things: assessing the impact on steel-using industries before new measures are introduced; more generous quotas for products that EU mills do not produce in sufficient volume or specification; and applying CBAM to finished goods at the same time as to raw materials, not years later.

The stated aim is to strengthen Europe’s competitiveness. But competitiveness is not created primarily by producing steel. It is created by turning steel into machinery, vehicles, energy systems and other products that can hold their own on the world market. If the EU continues to prioritise protecting raw material production over the competitiveness of the companies that use it, we risk winning the battle for steel and losing the fight for industry.

Anders Nilson Owner and CEO, Kominox Group