The Director General of the European Steel Association (EUROFER) stated in an interview with Euronews that the EU must accelerate negotiations with the United States on a tariff-rate quota (TRQ) system in order to avoid the excessive 50% tariffs currently applied to steel and aluminum, adding that such a deal could also support cooperation on addressing China’s excess capacity in the sector.
Such TRQ systems allow certain volumes of steel and aluminum to be imported at lower or zero tariffs, while any additional volumes are subject to much higher duties.
“Tariff-rate quotas are the only open point between us and the U.S.,” emphasized Axel Eggert, EUROFER’s Director General. “They are not perfect, but at least we are able to export to the U.S., whereas right now the situation is completely different.”
The TRQ system for steel and aluminum, introduced under the Biden administration, had replaced the 25% tariff on steel and 10% tariff on aluminum imposed during the first Trump administration. This system allowed up to 3.3 million tonnes of EU steel and 384,000 tonnes of aluminum to enter the U.S. tariff-free, with duties applying to any excess volumes.
Since returning to office, however, U.S. President Donald Trump has reinstated a 25% tariff on steel and aluminum. In June, these tariffs were doubled to 50% and, as of August 19, were extended to cover around 400 steel derivatives. Following weeks of trade disputes that targeted not only steel and aluminum but also all EU industrial products, the U.S. and EU reached an agreement to impose a 15% tariff on EU goods, excluding steel and aluminum.
The joint statement nevertheless underlined that both sides “intend to explore the possibility of cooperating to protect their domestic markets from overcapacity and ensure secure supply chains between them, including through tariff-rate quota solutions.”
“We had hoped for a clear commitment by the U.S. to maintain the tariff-rate quota we previously had,” Eggert said. “That was our objective, and it was also the Commission’s objective, but the Commission failed to achieve it.”
Eggert also stressed that the U.S. and EU could act jointly in addressing the problem of Chinese excess capacity in the steel sector.
According to OECD figures, there was a global steel overcapacity of 600 million tonnes last year, expected to rise to 720 million tonnes next year. Eggert noted that China alone accounts for more than 500 million tonnes of this surplus. “China is subsidizing its steel industry,” he said.
He added that although Trump imposed a 25% global tariff on steel and aluminum in March, the impact was absorbed by cheap Chinese products, leading U.S. tariffs to be raised to 50%.
The issue of overcapacity has been a central element of recent U.S.-EU negotiations, with the Commission encouraging cooperation between the two sides.
“If you have the world’s two largest markets, the U.S. and the EU, you have enough market power to ensure that companies producing excess capacity cannot survive,” Eggert predicted. “They will then of course be forced to reduce overcapacity.”
In 2021, the Biden administration and the European Commission launched negotiations on the so-called Global Arrangement on Sustainable Steel and Aluminum (GASSA), aimed at tackling overcapacity in the steel and aluminum sectors and promoting low-carbon production. These talks, however, were disrupted when Trump returned to office.
Eggert stated there is still a possibility that the agreement could be revived since “the U.S. administration has already addressed it in detail,” but he noted that the EU’s Carbon Border Adjustment Mechanism (CBAM) — which imposes a levy on certain carbon-intensive imports and has faced U.S. opposition — remains an unresolved issue.
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