The European Union has sought a balance between protecting its producers, securing a “green” future and avoiding a transatlantic clash as the steel industry grappled with the weight of trade wars, decarbonisation pressures and economic uncertainty.
On March 20, the day after the European Commission launched its Steel and Metals Action Plan aimed at reducing carbon emissions, maintaining industrial capacity and shielding European steelmakers from unfair competition, it paused its proposed retaliatory tariffs on US steel and aluminium imports.
These measures, originally set to be imposed on April 1 and 13, illustrated the EU’s cautious approach amid volatile trade tensions and the legacy of earlier tariff rounds initiated during US President Donald Trump’s first term.
At the heart of the Action Plan was an effort to transition Europe’s steel industry towards green production, a shift essential for both competitiveness and climate goals.
The plan specifically promoted investment in hydrogen-based steelmaking and increased use of recycled steel, while also tightening trade defences to shield EU producers from cheaper, high-emission imports.
The State of the European Steel Transition report, also published on 19 March, by experts from civil society and think-tanks, suggested that while Europe was leading in near-zero-emission steel innovation, it risked falling behind without urgent policy shifts and financial backing.
Global competitors, particularly China and the Middle East and North Africa (MENA) region, have been notably investing in hydrogen-based steelmaking, while European producers have struggled with high energy costs and regulatory uncertainty.
The report also highlighted that Europe’s current steel production relied heavily on coal-based blast furnaces, making rapid transition difficult without stronger policy incentives.
Producing green steel required vast amounts of renewable electricity and hydrogen infrastructure that remained underdeveloped in much of Europe.
While the commission promoted recycled steel and cleaner production methods, the costs have been immense and industry leaders warned that without greater subsidies and a more stable regulatory framework, Europe’s steelmakers could be undercut by cheaper, high-emission imports, the report warned.
A closer look at the timeline exposed familiar patterns. Under Trump’s first presidency, the bloc faced a similar dilemma when the US imposed a 25 per cent tariff on steel and a 10 per cent tariff on aluminium in 2018.
Then, as now, the EU was caught between retaliatory instincts and the strategic need to preserve economic stability. The 2018 tariffs led to price surges in the US, briefly boosting domestic steel production but harming downstream industries reliant on affordable metals.
Now, with Trump back in the White House and his administration’s policy on protectionist measures, Europe has been left facing an even tougher landscape.
The February 10 US decision to impose new tariffs, which took effect March 12, has significantly raised the stakes. Unlike in 2018, this round of duties extended beyond raw materials to finished steel and aluminium products, widening the economic impact.
Beyond production, the EU must also secure its supply chains for critical raw materials including nickel and aluminium, made more difficult by geopolitical tensions.
The bloc is exploring new trade defence measures, including extending the Carbon Border Adjustment Mechanism (CBAM) to more steel and aluminium-based products but these policies are still under review.
There are 2.6 million jobs tied to the sector, so that ensuring a smooth transition to greener steel without mass layoffs has remained a challenge.
