EU raises the bar on steel support – UK must act now

19 March 2025

The European Commission has unveiled its bold Action Plan for Steel and Metals, which will deliver comprehensive measures to protect and strengthen the European steel industry. With global overcapacity, coupled with rising energy costs, and new US tariffs and forthcoming trade diversion intensifying pressure, the EU’s rapid response highlights the urgency of the moment.

Key measures include:

Ensure an affordable and secure energy supply for the sector: Promote the use of Power Purchase Agreements (PPAs), encourage Member States to leverage energy tax flexibility, reduced network tariffs to alleviate electricity price volatility, faster grid access for energy-intensive industries (EIIs) and support the increased use of renewable and low-carbon hydrogen within the sectors.
Prevent carbon leakage: The Carbon Border Adjustment Mechanism (CBAM) to ensure that non-EU industries do not “greenwash” metals to appear low-carbon while still relying on high-emission energy sources.
Expand and protect European industrial capacities: The Commission is tightening the current steel safeguards. Before the end of the year, the Commission will propose a new long-term measure once the current EU steel safeguard expires in mid-2026 and will assess the introduction of the “melted and poured rule” to determine the origin of metal goods.
Promote Circularity: Set targets for recycled steel in key sectors, assess whether more products should have recycling or recycled content requirements. The Commission will evaluate trade measures on metal scrap.
De-risking decarbonisation: Allocate €150 million through the Research Fund for Coal and Steel in 2026-27, with an additional €600 million via Horizon Europe devoted to the Clean Industrial Deal. At the scale-up stage, a targeted €100 billion through the Industrial Decarbonisation Bank, drawing on the Innovation Fund and other sources, will join with a €1 billion pilot auction in 2025 focusing on decarbonising and electrifying key industrial processes.
Protect quality industrial jobs: The European Fair Transition Observatory and the Quality Jobs Roadmap, part of the Clean Industrial Deal, will oversee employment impacts, ensuring workers' rights are protected.

Many of the new EU Commission policies align directly with proposals UK Steel has already put to Government. The UK must now match this ambition to avoid falling behind. While the Steel Strategy is under careful development, and should run its course, there is a critical opportunity for the UK Government to establish new measures now before it is finalised. For example, to strengthen UK steel safeguard quotas for 1 April, at the same timescale the EU has committed to for its steel sector.

Gareth Stace, Director General, UK Steel, said:

"The speed and ambition of Ursula von der Leyen’s Steel Action Plan shows what’s possible when governments act decisively. The UK Government should take note. The EU Commission’s plan tackles the same challenges facing UK steel, including high energy prices, trade defences, securing critical raw materials, a stronger Carbon Border Adjustment Mechanism, and prioritising domestic steel in procurement.
“A long-term Steel Strategy matters, but certain actions are needed now. UK Steel has handed clear, worked-up solutions that will reverse our decline to Government. It is time to deliver competitive energy prices, tighten our safeguards against a flood of imports and ensure publicly-funded projects use British-made steel.
“The EU has set out a bold and urgent vision for its steel sector. The UK Government must match that ambition and act swiftly to secure the future of our industry before it is too late. We trust it will."

The European Commission’s Action Plan for Steel: https://ec.europa.eu/commission/presscorner/detail/en/ip_25_805

Steel safeguards and trade diversion:

Safeguards are a type of trade remedies measure intended to address unexpected surges in imports that are damaging or threatening to damage domestic producers. Safeguards can take various forms but the most common is a tariff-free quota – this allows the continuation of tariff-free imports at the same level or higher as the period before the safeguard was introduced.
The UK inherited its steel safeguards from the EU which introduced its own equivalent measure in 2018 principally to guard against import diversion from the US after the introduction of Section 232 tariffs by President Trump. This raised the risk that much of this steel would be diverted to other markets, with the EU being a prime candidate as the largest tariff-free market for steel in the world.
The UK is only partially shielded from trade diversion expected to occur as a result of President Trump’s new 2025 25% steel tariffs. Steel safeguard quotas have been liberalised every year and are now 22% larger than when they were first introduced in 2018. All while UK demand has contracted by 16%. These quotas are oversized and do not offer adequate protection from the large-scale trade diversion that is likely to take place.
These safeguard measures will lapse in June 2026. It is essential that existing measures are tightened, as the EU is doing with its own measures, and concrete plans are put in place for the replacement of safeguards, ideally well before their expiry.
UK Steel has submitted a review request to the Trade Remedies Authority (TRA) to tighten existing steel safeguards in the short term ahead of a potential new longer-term solution in 2026.

Global excess capacity:

Global excess capacity was estimated at 543 million tonnes in 2023 and is forecasted to reach 630 million tonnes by 2026 – equivalent more than 100x the UK’s production.
Capacity expansions in Southeast Asia and the Middle East are continuing at an alarming rate – these are largely state-funded, mostly for high-emission blast furnaces and often do not correspond to domestic demand trends.
Steel demand in China, the world’s biggest steelmaker, is also weakening, causing supply to spill over into other markets and dampen steel prices. China exported in excess of 100Mt of steel during 2024. This could meet the entirety of the UK’s steel demand for 13 years.
Already the import share in the UK has jumped to a shocking 68% so far in 2024, from 60% in 2023 and 55% in 2022.
The impact: The last time these levels of Chinese exports were seen, several UK steel plants were forced to close and thousands of jobs were lost (2015-16 steel crisis).

US steel import tariffs: UK Steel’s reaction to and analysis of President Trump’s 25% steel tariffs can be found here – 10 February; 12 March

The UK steel sector:

The UK steel sector:

Produces 5.6Mt of crude steel a year, equivalent to 70% of the UK’s annual requirement (annual demand of 7.6Mt in 2023, of which 40% was met by domestically produced steel)
Employs 33,700 people directly in the UK and supports a further 42,000 in supply chains
The median steel sector salary is £37,315, 26% higher than the UK national median and 35% higher than the regional median in Wales, Yorkshire, and Humberside, where its jobs are concentrated
Directly contributes £1.8 billion to UK GVA and supports a further £2.4 billion
Directly contributes £3.4 billion to the UK’s balance of trade 96% of steel used in construction and infrastructure in the UK is recovered and recycled to be used again and again.

For further information about the steel industry, please see the UK Steel Seven Opportunities for Steel report, 2024 press pack, Why the UK needs a strong steel sector or the 2024 UK Steel Key Statistics report.