The British steel industry warns of the “greatest crisis” ever seen while the EU increases customs tariffs

The European Union’s decision to increase customs duties on steel and to greatly reduce import quotas has aroused generalized concern in the United Kingdom, as well as roars of dissatisfaction among the car manufacturers on the continent.

The block announced Tuesday its intention to reduce quotas without customs duties on imported steel – offering a reduction of 47 % compared to steel quotas of 2024 – and to increase customs duties by 25 % to 50 % on any excess import.

The European Commission said that these measures were a response to calls for workers, industry and several member states “to provide strong and permanent protection to the EU steel industry, with a view to safeguarding jobs in the EU and supporting the sector in its decarbonization efforts”. The proposal will replace the steel backup measure, which should expire by June 2026.

The increase in customs duties has caused an immediate outcry in the United Kingdom, the steel industry in the country in difficulty already undergoing a number of hard blows, including crushing closings resulting in thousands of jobs and 25 % American customs duties on steel exports to the United States.

“It is perhaps the greatest crisis that the British steel industry has ever been confronted,” said Gareth Stace, managing director of the industrial organization UK Steel on Tuesday.

“The government must do everything to take advantage of our trade relations with the European Union in order to guarantee the UK quotas, under penalty of risking disaster,” he added.

Emily Sawicz, director and principal analyst of the industrial sector at RSM UK, told CNBC that the EU’s announcement was a “significant threat” for the British steel industry.

“The EU represents around 80 % of Steel exports from the United Kingdom, so these customs duties are likely to cut access to the largest and most strategic market in the United Kingdom at a time when the sector is already subject to immense pressure from global competition and energy costs,” she told CNBC to “Europe Early Edition” on Wednesday.

The decision of the block follows similar customs duties on foreign steel imposed by the United States and Canada in order to slow down cheaper imports-largely from China-which, according to them, harm their national steel industries.

US President Donald Trump increased customs duties on the majority of steel and aluminum imports from 25 % to 50 % this year, while Canada has tightened import limits and introduces a 25 % surcharge on all imports of steel initially melted and cast in China.

China rejects the accusations that it has poured inexpensive steel surpluses on the world market.

The EU noted Tuesday that “steel overcapacity is a global problem that requires strong, authentic and joint action on the part of all partners”.

Customs duties have been promoted as a means of protecting national steel industries, but sectors that depend on this basic product – notably the automotive industry – have relied on quotas and customs duties.

The United Kingdom will probably seek to obtain an exemption from the EU and could be delighted that Norway, Iceland and Liechtenstein will not be subject to tariff contingents or customs duties on EU steel as is the case in the European Economic Area (EEE).

The Commission also reported its desire to exempt Ukraine from these rights, noting that “the interests of a candidate country facing an exceptional and immediate security situation, such as Ukraine, should also be taken into account when the quota is awarded, without compromising the effectiveness of the measure”.

The United Kingdom is not part of the EEE, but is a close trading partner and an EU ally. Prime Minister Keir Starmer said, after the announcement of customs duties increase, that the government had discussions with the EU and the United States about steel customs duties.

Retherment measures may not be excluded, as pointed out in the British Minister of Industry, Chris McDonald: “We continue to study more strict trade measures to protect British steel producers from unfair behavior”.

However, he added that “it is essential that we protect the trade flows between the United Kingdom and the EU and that we will work with our nearest allies to meet the global challenges”.

The EU’s announcement was not well received everywhere on the continent, the Association of European Automobiles (ACEA) manufacturers saying that these measures could threaten the national automotive industry.

The automotive organization has noted that European car manufacturers are obtaining around 90 % of their direct steel purchases in the EU and that they are “particularly concerned” by the inflationary impact that restrictions will have on European market prices.

“The drastic reduction of quotas and the doubling of customs duties excluding 50% will considerably reduce the possibility of relieving pressure on the European market through imports,” ACEA said in a press release.

In addition, he declared that a new rule of origin based on the principle “melt and pay” will further restrict imports and “create a huge administrative burden for European users of imported steel products”.

The Director General of ACEA, Sigrid de Vries, said that the organization recognized the need for a certain level of protection for the steel sector, but added: “We believe that the parameters offered by the Commission will go too far in the separation of the European market. We must find a better balance between the needs of European producers and users of European steel.”