The European Commission has proposed new protective measures for imported steel products. The new regime halves tariff-free volumes and doubles the out-of-quota tariff to 50%. From 2026, it will sit alongside CBAM, which puts a carbon price on embedded emissions. Together, these measures raise the landed costs of imported steel products.
(Last update on 10/11/2025)
Protecting Europe’s steel industry
Europe is tightening its trade and climate policy for steel at the same time. On October 7, 2025, the Commission tabled its plan to replace the current safeguards, which expire in June 2026. Beginning of 2026, the definitive phase of the Carbon Border Adjustment Mechanism (CBAM) will affect steel importers too.
Both form critical elements of the Steel & Metals Action Plan (SMAP) to protect industrial competitiveness. The goal is to address global overcapacity, prevent import surges, and create room for investment in low-carbon steel.
Steel overcapacity and increased tariffs in other markets, like the US, risk diversion of steel products into the EU. The proposal therefore resets tariff-rate quotas (TRQs) to much lower levels and raises the out-of-quota duty to 50%, reinforcing market stability while the EU rolls out CBAM with the phase-out of free ETS allowances.
CBAM adds a carbon price to imported steel so that its carbon costs are the same as for EU-made steel. The proposed safeguard ensures import volumes remain predictable while CBAM handles carbon cost parity. The 2 levers together aim at competitiveness and decarbonization.
Just recently, the EU adopted amendments of the CBAM regulation. And while the rules for the definitive phase of CBAM are still in the making, the new safeguards proposal also needs to go through the ordinary legislative EU procedure – involving both EU Parliament and Council.
Once adopted, the Commission also needs to finalize implementing acts to fix details, such as country allocation of TRQs. Time is tight to have the new system take over seamlessly when the current safeguards expire on 30 June 2026. GATT Article XXVIII talks to adjust relevant WTO concessions are opened too.
New safeguards regime
The Commission’s proposal involves 3 main elements:
- Tariff-free quota cut to ca.18.3 mio. t p.a. (about half of recent levels);
- 50% duty above quota (up from 25%);
- “Melt & pour” origin traceability to curb circumvention.
Whereas both, safeguards and CBAM overlap in their coverage of steel products, there are some key differences in the working of these indirect taxation instruments.
Coverage of new steel safeguards
The recent proposal replaces the current safeguard regime with TRQs for 28 categories of steel products. Some categories (like metallic-coated sheets) are further split into sub-quotas. Scope, product codes and the administration of quotas follow the EU’s standard customs product coding.
Based on 2024 trade data from Eurostat COMEXT, the listed CN codes account for EU imports of 29.8 mio. tons. CBAM covers all these CN codes and additional steel products – totaling an import volume of 37.0 mio tons in 2024. Overall, steel products make the largest category in CBAM in terms of import volume and value.
Calculation of steel quotas
The Commission proposes much lower tariff-free volumes than in recent years. The volume for each category is calculated by applying the imports’ market share in the EU market in 2013 as reference (around 13% market share), to the total EU consumption level in 2024.
The category-specific quotas add up to an annual volume of approximately 18.3 mt, or 17.1 mt without codes that are covered in more than one category. Trade data show that EU imports in 2024 exceeded the proposed quotas in most categories: In total, the quotas would allow < 60% of the import volume in 2024.
Global quotas will be broken down into country allocations to reflect traditional trade flows and to avoid concentration risk. The Commission will set these quotas, using implementing acts to define quarterly opening, carry-over and transfer rules (where applicable), and monitoring requirements.
Out-of-quota tariffs
When these country-specific quotas are exceeded, a 50% duty on the customs value will be applied in addition to any other applicable EU duties (e.g., anti-dumping). It will be ensured that a shipment cannot draw from multiple TRQs at once, so that there is no double counting across sub-quotas.
These tariffs come on top of CBAM obligations. Practically, importers pay these tariffs at customs clearance. By contrast, CBAM charges are not paid at the border. Within minimum holding requirements, importers purchase CBAM certificates over a year – starting February 2027. The overall bill is settled post-import when the annual CBAM declaration is due.
Steel traceability (melt & pour)
To improve origin transparency and narrowing routes for circumvention or misclassification, importers need to identify the country where the steel was “melted and poured”. At import, evidence is needed for the mill where liquid iron or steel was first produced and cast into solid form.
CBAM relies on emissions data from the manufacturing installations. As the majority of steel emissions stems from melting and pouring processes, ultimately steel importers will need data from the same mills for CBAM too. When no emissions data is available, still the country of origin needs to be identified.
Added costs to imported steel products
Jointly, these new safeguards and CBAM will make imported steel products more expensive. Based on EU trade statistics and CO2 IQ calculations, imported steel products in 2024 falling under both, the new safeguards and CBAM, sum-up to a total value of EUR 26.6 bn.
With no trade adjustments, they would face added costs of 37% with:
- EUR 5.9 bn tariff costs for category-specific import volumes surpassing the proposed quotas (based on global values; no differentiation for country-of-origin made);
- EUR 3.8 bn of CBAM costs for the embedded emissions in the CN-code specific import volumes (assuming 2024 carbon prices and fully phased in CBAM).
The combined effect is a step-change in landed costs: TRQs create a hard 50% duty cliff once quotas are exhausted within a quarter, while CBAM adds a variable carbon cost that rises with embedded emissions and the EU ETS price.
In the market current dynamics may become aggravated: Uptick in early-quarter entries and shifts towards products and countries with under-utilised TRQs towards the quarter end can be expected. In addition, CBAM will favor countries and mills with lower carbon footprints.
For buyers, this means wider price dispersion by product and origin and more volatility around quarter-ends as quotas tighten. Industries with high steel intensity (automotive, machinery, construction, etc.) will see input-cost inflation ripple through, with margin pressure where pass-through is constrained.
To get prepared importers can:
- Apply our two-layer landed-cost model to budget scenarios and set price guardrails for CBAM and safeguards;
- Secure documentation and data: e.g. broker-ready CN code/TARIC mapping, melt-and-pour evidence, and embedded-emissions data;
- Adjust timing and sourcing of imports: e.g. stagger shipments to early quarter; diversify across origins/TRQs; line-up contingency suppliers;
- Adjust contracts, e.g. for quota-risk and CBAM pass-through clauses; emissions data delivery and audit rights; price escalators;
- Align finance & controls, and cash-flow planning for purchase of CBAM certificates and potential 50% duties.
Together, the new steel safeguards and CBAM will reshape EU steel procurement by raising landed costs and cash outflows at the end of each quarter. A closer coordination of purchasing, import and financial planning will be needed.
Sources and further information:
- EU Commission: Plan to protect EU steel industry (Press release)
- EU Commission: Proposal fpr measures addressing negative effects on the Union steel market (COM 2025/726)
- EU Commission: Analyses accompanying the document (staff working paper)
- EU: Regulation Establishing CBAM (2023/956)
- EU: Regulation Amending CBAM (2025/2083)
Photo by KamranAydinov on Freepik
