EU Proposes Sweeping Measures to Safeguard Domestic Steel Industry Amidst Global Overcapacity

On October 7, 2025, the European Commission unveiled a significant proposal aimed at strengthening the EU’s domestic steel industry in the face of global overcapacity, particularly from China. The measures include a nearly 50% reduction in duty-free steel import quotas, down to 18.3 million tonnes per year, alongside a 50% tariff on any volumes exceeding these new limits. The proposal is intended to replace the current safeguard mechanism, which is set to expire in mid-2026, and to restore a competitive environment for European steel producers. Currently, the EU applies import quotas for 26 steel product categories, with a 25% tariff on imports exceeding the quota.

The European steel sector has been facing a prolonged crisis, characterized by overcapacity and declining demand. According to the European Steel Association (Eurofer), in the past year alone, 12 million tonnes of production capacity were closed and 18,000 jobs were lost. Since 2008, the industry has seen approximately 100,000 job losses and 26 million tonnes of production capacity removed. EU Commissioner for Industry, Stéphane Séjourné, highlighted the urgency of the situation, stating that the European steel industry is on the brink of collapse and must be protected to allow for investment, decarbonization, and restoration of competitiveness.

The proposal also aims to foster closer coordination with the United States to address China’s extensive steel overproduction. In 2023, China produced 55.1% of the world’s crude steel, while the EU and the US produced 6.8% and 4.4%, respectively. Negotiations between the EU and the US are ongoing to align steel and aluminum import rules, protecting domestic markets from cheap imports and addressing global trade imbalances.

The European steel industry is a crucial contributor to the EU’s energy transition, providing essential materials for renewable energy infrastructure such as solar panels, wind turbines, and electric vehicles. While directly employing around 300,000 people, the sector supports approximately 2.3 million additional indirect jobs, which remain at risk if current trends persist. In 2024, EU steel imports totaled 27.4 million tonnes. The proposed 13% cap on tariff-free imports would reduce the hot-rolled coil (HRC) quota to around 5.7 million tonnes annually, representing a 35% reduction compared to 2024, and is expected to stimulate increased domestic production to meet demand.

Economically, the European steel sector contributes roughly €215 billion to the EU economy. The proposed changes are designed to increase capacity utilization from 60% to 80%, helping the industry weather global market pressures. Challenges include high energy costs, rising CO₂ prices, and competition from low-cost imports, primarily from China. By strengthening the domestic industry, the EU aims to safeguard its strategic autonomy in sectors reliant on steel, such as infrastructure, defense, and renewable energy.

Internationally, the proposals have sparked concern in the United Kingdom, where a majority of steel exports are sent to EU markets. UK producers warn that the measures could have serious consequences for their own industry. Meanwhile, global steel capacity is projected to grow further, particularly in China and India, which could continue to saturate the market and pressure European producers.

If adopted by EU member states and the European Parliament, these measures are expected to replace the current safeguard system in mid-2026. They represent a decisive step toward enhancing the competitiveness, resilience, and long-term sustainability of the European steel industry in a volatile global market.