EU, US align on curbing steel, aluminum overcapacity, tariffs persist

The EU and US have confirmed their intention to cooperate on "ring-fencing their respective domestic markets from overcapacity" regarding steel, aluminum and their derivatives in an Aug. 21 deal.

The latest agreement confirms the deal struck by US President Donald Trump and European Commission President Ursula von der Leyen in late July. 50% import tariffs remain on EU steel, aluminum and their derivatives with the intention of working toward a tariff-rate quota for EU exports and ring-fencing against global steel and aluminum overcapacity.

"The text remains vague, but we recognize the efforts undertaken by EC President von der Leyen and trade Commissioner Sefcovic to find a joint US-EU initiative on steel, aluminum and their derivatives," European Steel Association, Eurofer, Director General Axel Eggert said in a statement.

"Work must start immediately to get back to preferential access for traditional EU steel volumes to the US, as no deadline is set and we already see the huge delay, for instance, in the implementation of the US-UK deal," he said.

Eggert said ring-fencing against global steel overcapacity meant close alignment of the EU and US import regimes.

"With the proposal in September for a new, highly effective trade measure replacing the EU steel safeguards, the EC must now prove that they are willing to take bold action that aligns the objective of the EU Steel Action Plan to promote and protect domestic steel capacity and the objectives of the deal with the US Studies show that the impacts of an effective EU steel trade measure on downstream sectors are negligible," Eggert said.

Since 2018, the European steel industry has lost 30 million mt of steel in the EU internal market and on export markets, due to global steel overcapacity -- driven by countries from Asia, North Africa and the Middle East -- as well as the effects of US Section 232 tariffs, and a decrease in steel demand in EU steel-using sectors.

Eurofer noted that, next to 50% US tariffs on EU steel, a 15% tariff on most other products meant an additional burden for EU steel, as many EU exports were steel-intensive, such as machinery and vehicles.

In 2024, at that time with a 2.5% tariff, around 760,000 EU vehicles were exported to the US, which could be estimated at around 1 million mt of EU steel, a significant part of which may disappear as a result of the new 15% tariff on vehicles, Eurofer said.

Since the US introduced section 232 tariffs in 2018, the EU steel industry has already lost up to 1 million mt of steel exports to the US, from 4.6 million mt in 2018 to 3.8 million mt in 2024, of which around 600,000 mt had to pay a 25% tariff.

"The longer the 50% tariff remains, the more likely it will be that also those exports will be eliminated," Eurofer said.

Meanwhile European Aluminium said in a LinkedIn post that it welcomed the focus on overcapacity, with both the US and EU having committed to exploring cooperation on tackling overcapacity, while ensuring secure supply chains between each other, including through possible TRQ solutions.

"Chinese overcapacity has distorted the aluminum market for years, putting European producers at a clear disadvantage," it said.

The association added that, while a TRQ would be an improvement compared to the 50% tariffs on most aluminum products (excluding scrap) currently in place, it remained convinced that aluminum should not be subject to additional trade barriers.

"Clarity on the details of any TRQ will be essential, and we await the legal text with great interest," European Aluminium said.

According to Eurostat data sent to Platts by European Aluminium, the EU exported 400,212 mt of aluminum products to the US in 2024, down 2.7% year over year, which was also down from the 403,418 mt exported in 2018.