EU Introduces New Safeguard Measure for the Steel Industry

In the past, the EU has imposed anti-dumping, anti-subsidy, and safeguard measures to protect the EU market. However, these measures were not sufficient to address the structural consequences of the overcapacity crisis. The safeguards introduced in 2018 in response to the first Trump tariffs will expire on June 30 2026. Due to numerous compromises, they no longer provided any protection. Given this situation, the EU has decided to develop a new, strengthened protective measure to replace the safeguards.

Like the safeguards, the new instrument will operate as a tariff-rate quota system. Above the defined quotas, a 50% tariff will apply – up from the previous 25%. A key difference from the old system is that the duty-free quotas are being reduced by half, making them significantly more effective than formerly. Another new feature is that additional steel-processing products can be included in the instrument, thereby mapping the entire value chain. 

In the United States, 50% tariff applies starting with the first metric ton. Under the new safeguard measure, however, a total quota of 18.3 million metric tons of steel may be imported into the EU duty-free – amounting to a reduction of just under 50 percent. A 50 percent tariff applies to imports outside the quotas, which previously stood at 25 percent. In addition, importers must maintain a so-called “Melt & Pour” proof of origin; Information regarding the country of melting and pouring will be mandatory in the future. The aim is to prevent, for example, Chinese steel from entering the EU by way of third countries. As a result, capacity utilization in the EU steel industry is likely to rise again to a satisfactory level and also support prices, without leading to absurd price spikes for steel users, as has happened in the United States.

Equating the two is a widespread misconception: The new protective measures primarily impact on quantity rather than price and are intended to ensure market stability. Anti-dumping and anti-subsidy duties are fundamentally different instruments. Anti-dumping duties are intended to counteract unfair price competition from a specific country and product; their effects are highly targeted and involve complex procedures.

The safeguard mechanism initially applies to 28 product groups, including, for example, flat steel, heavy plate, and beams, for which the share of imports has so far ranged from 25 to 35 percent. Semi-finished products such as slabs, on the other hand, have not yet been included. There is also a lack of protection for products at the first stage of the value chain: steel structures, tanks, wind turbine towers, and components.

CBAM stands for “Carbon Border Adjustment Mechanism”. This regulation is known in this country as the “CO₂-Border Adjustment Mechanism.” With this instrument, the EU aims to create a level playing field for climate-friendly industries in the EU and support its decarbonization strategy. Starting as from January 1, 2026, steel importers must expect CO₂ costs of approximately 50 to 60 euros per metric ton. This is intended to ensure a level playing field, at least in part, because the European steel industry is also tasked with assuming CO₂ costs by way of emissions trading. The CBAM and the new safeguard instrument are interlinked and work in a complementary manner. Countries such as China, South Korea, and Indonesia, as traditional exporting nations, are allocated higher quotas through the new mechanisms, but must bear higher CBAM costs due to their CO₂-intensive blast furnace production. Countries such as the Gulf states, which already have lower CO₂ emissions due to cheap natural gas, will benefit from the CBAM – but will face lower import quotas under the new protective measures given that they have supplied relatively low volumes so far.

The new protective measures are intended to ensure sustainable capacity utilization in the European steel industry and stable prices. The goal: long-term planning certainty that will make it possible to finance the green transformation, which will cost billions. Salzgitter AG is already well underway in its transformation toward virtually CO₂-free steel production with SALCOS^® – Salzgitter Low CO₂ Steelmaking.

The EU's import restrictions are meeting with protests in third countries. China accuses the EU of protectionism and has already threatened to take retaliatory measures. In countries outside Europe, many had apparently hoped for less stringent EU protective measures. After all, EU trade policy has traditionally been geared toward free trade and export-oriented growth – which is changing right now. In light of the flood of cheap imports from China, several EU countries are now pushing to further strengthen trade defense measures and extend them to other industrial sectors as well. Otherwise, they fear, imports could threaten entire industries and sectors in the EU.

With improved capacity utilization and stable prices, the steel industry sees itself as better equipped to invest in its sustainable transformation. Nevertheless, additional key markets for CO₂-produced steel are needed to ensure demand for climate-friendly steel, which is more expensive to produce. The rationale: Until CO₂-reduced raw materials become commercially viable on the market, companies need supporting measures for their transition efforts to ensure that their investments pay off.

The new protective instrument represents a turning point in industrial policy. This measure creates the economic foundation that allows European steel companies, such as Salzgitter AG, to invest in decarbonization rather than being forced out of the market by subsidized imports.