Europe Launches a Battle to Defend Its Steel Industry

Steel is not only a traditional industrial sector in Europe but also the cornerstone of its economic system. According to statistics, the EU steel industry directly employs more than 320,000 people and indirectly supports approximately 2.6 million jobs. From the giant steel mills in Germany's Ruhr region to the precision specialty steel manufacturers in northern Italy, the "capillaries" of the steel industry chain are spread throughout every corner of the European economy.

However, with the rise of unilateralism and trade protectionism, the EU steel industry is facing an unprecedented crisis. Without independent steel production capacity, the EU's goals of defense autonomy and strategic autonomy will be out of the question. As French President Emmanuel Macron put it, a Europe without steel is doomed to become a vassal of geopolitics.

As the US government began imposing a 25% tariff on all imported steel and implementing so-called "reciprocal tariffs," EU policymakers realized that this is not just a trade dispute but also a strategic challenge related to the survival of the European industrial system. On April 7 local time, Maroš Šefčovič, the EU Commissioner responsible for trade and economic security, stated that the EU is prepared to use "all trade defense measures" to counter the impact of US tariffs and will implement the first round of retaliatory tariffs against the US starting from April 15. Later that day, the European Commission proposed to member states to impose a 25% tariff on certain US products in response to the US steel and aluminum tariffs. Internal EU documents show that the scope of goods subject to tariffs is extensive, including even diamonds, eggs, sausages, and poultry.

In addition, the European Commission has released a "New Steel and Metal Industry Action Plan" aimed at enhancing industry competitiveness and addressing the potential impact of US steel tariffs. European Commission President Ursula von der Leyen stated when announcing the new plan, "This is not just about saving an industry; it is about defending Europe's future."

Currently, the EU steel industry is mired in multiple crises, and the situation is highly complex.

1. Trade Crisis

The US tariff policy has immediately led to a contraction in EU steel exports to the US. Data shows that in Q1 2025, EU steel exports to the US decreased by 42% year-on-year, a reduction of approximately 1.5 million tons. The steel industries in Germany and Italy have been particularly hard hit.

2. Industrial Crisis

According to statistics from the European Steel Association, the EU has lost nearly 100,000 steel jobs over the past decade. Thyssenkrupp's announcement of a 5,000-person layoff plan at the end of 2024 is just the tip of the iceberg. The Ukraine crisis has further led to high energy costs in Europe, leaving European steel companies with almost no way out and continuously weakening their international competitiveness and investment capabilities.

3. Transformation Crisis

According to the requirements of the EU Green Deal, the steel industry must achieve carbon neutrality by 2050. However, new technologies such as hydrogen-based steelmaking require huge investments. Just a medium-sized hydrogen-based steel mill requires approximately €5 billion in upfront investment. Although the EU has slowed its green pace, the transformation pain of the European steel industry remains difficult to alleviate.

In the face of the crisis, the EU's new policy initiative aims to build a three-dimensional response system encompassing trade defense, industrial policy, and green transformation. There are three measures in terms of trade defense:

(1) Reducing Steel Import Quotas

The European Commission has decided to cut import quotas by 15% starting in April. This is not simply a quantitative control but an intelligent adjustment mechanism based on market monitoring. Through a real-time steel trade data platform, when the import growth rate of a certain type of product exceeds the warning line, additional protection measures will be automatically triggered.

(2) Upgrading Anti-dumping Measures

The EU has adopted a new calculation method for the anti-dumping duties imposed on hot-rolled steel from countries such as Egypt and Japan. It not only considers price dumping but also incorporates "environmental dumping" into the assessment system for the first time. This lays the foundation for future "green anti-dumping" measures.

(3) Improving Rules of Origin

The newly introduced "smelting and casting" rule attempts to close the loophole of changing the origin through simple processing.

In terms of industrial policy, the EU is increasing support:

(1) Implementing New Public Procurement Regulations

Starting from 2026, the EU will implement new public procurement regulations. For example, in key areas such as defense and energy, steel products purchased by governments must meet the "European content" standard. This measure is modeled on the US "Buy American Act," but it avoids conflicts with World Trade Organization rules through more refined design.

(2) Financing Innovation

The European "Industrial Decarbonization Bank" will provide €100 billion for reverse auctions. When steel companies bid for government subsidies, they need to commit to specific emission reduction targets and employment guarantees. This market-based allocation method significantly improves the efficiency of fund utilization.

(3) Helping Companies Control Energy Costs

The EU is establishing a dedicated power market for the steel industry, allowing companies to sign 20-year fixed-price power purchase agreements with renewable energy generators to ensure a stable energy supply.

In terms of green transformation, the EU is turning crises into opportunities. The EU will set up a €30 billion "Green Industry Fund" specifically to support the decarbonization process of the steel industry. The EU is building a hydrogen-based steel cluster covering the entire industry chain. This clustered development model significantly reduces the transformation risks for individual companies.

The EU also plans to strengthen the Carbon Border Adjustment Mechanism (CBAM) by the end of this year. The upgraded CBAM will expand the product coverage and introduce a "carbon intensity grading" system. Imported steel with different emission levels will face differentiated tariffs. Additionally, there is scrap steel recycling. The European Commission has set a target of 70% scrap steel recycling and utilization. Encouraging policies include restrictions on scrap steel exports, subsidies for recycling technology research and development, and the establishment of a European scrap steel trading center.

The rise and fall of the steel industry is not only an economic issue but also reflects changes in the geopolitical landscape. In the future, the global steel market may witness a more fragmented trend. Trade disputes between Europe and the United States may lead to further market fragmentation. The US "America First" policy has put the world trade system under severe test. Whether the EU can maintain a fair competitive environment and remain open in the process of protecting its steel industry will determine its future strategic position.

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