In a significant blow to Europe’s struggling steel industry, the European Union has failed to secure any reduction of the punitive 50% US tariff on steel imports as part of its draft trade agreement with the United States.
The development marks a critical setback in EU-US trade talks and has triggered alarm among European manufacturers, who warn the tariff—first imposed by Donald Trump—could prove “catastrophic” for the sector.
According to EU diplomats, the proposed agreement includes a 15% baseline tariff for a wide range of EU goods entering the US market. However, steel remains an exception, still subject to a full 50% tariff, with no reductions in sight.
In stark contrast, UK steel exports face only a 25% tariff, set to drop to zero under the UK-US agreement signed by Prime Minister Keir Starmer in May—pending final resolution of rules-of-origin issues.
“Europe has been left out in the cold while the UK cuts deals,” said one industry source. “Our exporters are losing both markets and patience.”
At an AI summit in Washington, President Trump reiterated his hardline stance, stating that countries without a trade agreement would face tariffs “between 15% and 50%”. The EU’s attempt to secure exemptions or quota-based compromises on steel appears to have fallen flat.
Diplomats admit that while talks are ongoing, the current outline leaves little room for optimism. The EU is now exploring a “quota threshold” option, allowing 50% tariffs only on exports exceeding a certain volume—but even that is yet to be agreed.
The European Steel Association (Eurofer) has condemned the tariff as “catastrophic”, warning that US protectionism is distorting global markets and flooding Europe with redirected steel exports.
“As we lose access to our major export market, the European market is being saturated by the steel the US no longer takes,” Eurofer warned in a recent statement.
Germany’s Chancellor, Friedrich Merz, is reportedly pressuring Brussels to finalise a deal—even at the cost of high tariffs—fearing prolonged uncertainty could further damage investment sentiment in key sectors like automotive.
With a planned visit to Scotland this weekend, Merz may attempt a direct intervention with President Trump, leveraging their established relationship.
Meanwhile, in Beijing, European Commission President Ursula von der Leyen warned that the EU’s openness with China is being strained by an “increasingly distorted” trade relationship. While she acknowledged China accounts for 14.5% of EU imports, the bloc only exports 8% in return—largely due to state subsidies and market access barriers.
China’s President Xi Jinping responded diplomatically, urging both sides to make “correct strategic choices” and denying that Europe’s problems stem from China.
Talks between China and the EU made tentative progress on restoring supplies of rare earths, critical to European car production. However, Germany’s automotive lobby, VDA, warned that “production stoppages can no longer be ruled out” as key components remain in short supply.
Adding to the tension, the European Central Bank kept interest rates steady on Thursday, adopting a wait-and-see approach amid fears that further US tariffs could push the eurozone into stagnation.
The failure to secure relief on steel tariffs raises difficult questions for the EU’s negotiating strategy. While Brussels appears willing to compromise to avoid a full-blown trade war, the price—paid by Europe’s core industries—may be too high.
The EU is caught in a tightening vise between US pressure and Chinese competition, with little room left for missteps.
If the deal holds as currently outlined, Europe’s steel sector could become collateral damage in a trade détente that leaves industry out of the equation.