As Brussels rushed to avoid a new round of tariff escalations with Washington, Europe’s steel sector has been left exposed.
A safeguard limiting steel imports is set to expire in the coming weeks, while US duties on European metals have already doubled, yet no new protection has been offered.
Despite warnings from European producers about a surge in imports and collapsing margins, no new protections were being put in place, though the talks were billed as “reciprocal” and steel was nowhere to be seen.
The European Commission has pushed for a UK-style deal, one that would leave some tariffs in place but de-escalate tensions with vague commitments on future co-ordination.
But, unlike London-Brussels’ post-Brexit agreement, which locked in tariff-rate quotas, the EU’s draft so far has offered no specifics for steel, only sectoral “dialogues”.
“Trump thinks he can move faster with Europe than with China or the UK,” said Christofer Govaert, chief strategist at Belgian bank Nagelmackers on June 23.
“But this kind of framework doesn’t mean much. There are no clear conditions, no details. It’s not credible that a full deal will happen by July 9.”
Govaerts pointed to the UK-European Union post-Brexit talks as a cautionary example: “That deal took over two years. Even if the EU wanted to move fast, it’s not realistic. Trump assumes he can strike a comprehensive trade accord with Brussels in days. That’s fantasy.”
While Brussels delayed its response, the political cost was becoming clear and the steel sector would be bearing the brunt.
The EC has concentrated its negotiations on non-tariff issues such as tech regulation and carbon border measures, part of a broader effort to de-escalate trade tensions before Trump’s July 9 deadline for additional retaliatory tariffs.
But for Europe’s steelmakers, who have been facing a sharp rise in Chinese and Turkish imports, the silence was growing costly.
“Steel is symbolic and has a cultural heritage in Europe,” Varg Folkman, an analyst at the Europe’s Political Economy Programme, told Brussels Signal on June 23.
“It’s fundamental for many industries ” but politically, it was collateral damage, he said.
European steelmakers warned of the surge in cheap imports, especially from China and Turkey, once protections lapsed.
Folkman said Chinese overcapacity was a structural phenomenon: “Overcapacities do not only come from subsidies.
“In China, when the State calls a sector strategic [such as steel], entrepreneurs rush in to make money, even when there’s already fierce competition. Companies survive thanks to state aid, cheap loans, and land. Many make no money — they just create surplus capacity and flood export markets.”
He added that, while Chinese firms may operate at a loss, the aim was to outlast competitors. “They survive this way and hope that in the future, when there is less competition, they’ll turn a profit.”
Govaerts was similarly blunt about the European position: “The Trump playbook is to punch first and negotiate later. That works once or twice but markets are catching on.”
Indeed, even amid war, volatility and mounting distrust in Washington, oil prices have barely edged up, seemingly more and more decoupled from geopolitics.
“Even if Brussels wanted to retaliate now, it would need broad internal backing and that’s not guaranteed”, Govaerts concluded.
