On 7 October 2025, the European Commission unveiled COM(2025) 726 final, a proposal to curb the negative trade effects of global steel overcapacity. The initiative seeks to replace the current safeguard measure, which expires on 30 June 2026, with a more stringent and structured regulatory framework.
Steel remains a strategic sector for the EU, underpinning construction, energy, transport, and defence. By tightening import controls, the Commission aims to preserve industrial competitiveness, support decarbonisation efforts, and strengthen Europe’s strategic autonomy.
Context and Rationale
The EU is the world’s third-largest steel producer, employing around 300,000 people directly and over 2.5 million indirectly. However, its competitiveness has eroded due to high energy costs, unequal global market conditions, and persistent import pressures from economies with state-subsidised overcapacity.
The sector has lost about 100,000 jobs since 2008, with numerous plant closures. The existing safeguard mechanism, introduced in 2018, provided temporary relief but will expire in mid-2026, leaving the EU exposed to renewed dumping risks. The new proposal aligns with broader EU initiatives such as the Competitiveness Compass (2025) and the Steel and Metals Action Plan (SMAP), both of which emphasise the need for resilient and sustainable industrial ecosystems.
Key Provisions
Tariff Quotas and Out-of-Quota Duties
Imports would be permitted under tariff-free quotas, reflecting historic trade patterns (based on 2013 import levels). Once a quota is filled, any additional imports would incur a 50 % duty, doubling the current 25 % safeguard rate. This measure is designed to deter dumping and trade diversion.
Quarterly Quota Management
Quotas will be administered on a quarterly basis, with no rollover of unused volumes between periods. Drawings close on the 20th working day after each quarter, providing greater predictability and preventing last-minute stockpiling.
“Melt and Pour” Origin Requirement
Importers must prove that the steel was melted and poured in the country declared as origin, through documentation such as mill certificates. This requirement aims to eliminate circumvention practices, where semi-finished products are re-routed to disguise their true source.
Exemptions and Bilateral Measures
Imports from EEA countries (Norway, Iceland, Liechtenstein) are exempt from the out-of-quota duty. The Commission may also introduce bilateral safeguards with specific partners under existing free trade agreements, provided such measures are compatible with those agreements.
Monitoring and Review
The regulation mandates a biennial review of covered products and an overall evaluation by 2031. This ensures continuous adaptation to evolving market dynamics and trade patterns.
Assessment and Implications
Strengths
- The 50 % duty substantially increases deterrence against unfair imports.
- The “melt and pour” rule enhances transparency and traceability in supply chains.
- The proposal maintains flexibility through delegated powers, allowing adjustments to quota volumes and product scopes.
- It aligns with the EU’s industrial, environmental, and defence priorities.
Challenges
- The WTO compatibility of the proposed duty level may be contested by trading partners.
- Quota allocation disputes could emerge, especially with volatile exporters.
- Administrative demands on customs authorities may rise due to origin verification.
- Downstream industries could face higher input costs if supply tightens.
The proposal represents a decisive policy shift towards stronger industrial protection. It balances market openness with the need to safeguard strategic production and support the green transition of Europe’s steel industry. If approved, COM(2025) 726 will mark a significant step in the EU’s effort to reinforce economic sovereignty, ensuring that steel, the backbone of Europe’s industrial fabric,remains competitive, sustainable, and secure against global distortions.
Sources:
Commission proposes plan to protect EU steel industry from unfair impacts of global overcapacity https://www.eeas.europa.eu/delegations/t%C3%BCrkiye/commission-proposes-plan-protect-eu-steel-industry-unfair-impacts-global-overcapacity_en
New trade measure is major leap forward to save EU steel and hundreds of thousands of jobs; now fast-track adoption is crucial, says EUROFER https://www.eurofer.eu/press-releases/new-trade-measure-is-major-leap-forward-to-save-eu-steel-and-hundreds-of-thousands-of-jobs-now-fast-track-adoption-is-crucial-says-eurofer
The future of a critical sector for the EU: addressing the overcapacity of steel https://www.secnewgate.eu/the-future-of-a-critical-sector-for-the-eu-addressing-the-overcapacity-of-steel/
