The European Commission has presented a legislative initiative to protect the European steel industry from global steel overcapacity. This new regulation establishes tariff quotas for thirty specific product categories. Once these quotas are exceeded, a 50% tariff will be applied. The plan also introduces traceability requirements to ensure transparency in the origin of materials. These measures will replace the current safeguards as of July 2026.

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Quota and Tariff Mechanism

For capital equipment manufacturers, the operating system is critical for cost planning:

• Duty-free tariff quotas: Annual quotas will be opened for 30 categories of steel products (including plates, sections and pipes) that can be imported without paying additional tariffs.
• Out-of-quota tariff: Once the volume allocated to a category or country is exhausted, a 50% ad valorem customs duty will be applied. This level is significantly higher than the 25% of the previous safeguard to minimize the risk of trade diversion.
• Quarterly management: Quotas will be managed on a quarterly basis to avoid import surges in short periods. Unused volumes in one quarter will not be carried over to the next.

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NewMelt and Pour requirement

This is the most important administrative development for importers:

• Definition: The “melt and pour” country is the original location where steel was initially produced in a liquid state and deposited in its primary solid state (ingots, slabs, etc.).
• Obligation: Importers shall provide documentary evidence (such as mill certificates) proving the initial country of origin of the steel.

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Exempt Countries and Trading Partners

• European Economic Area (EEA): Imports from Iceland, Liechtenstein and Norway are exempt from quotas and the 50% tariff, although they must also comply with the requirement to report the place of “melting and casting”.
• Ukraine: Its exceptional security situation will be taken into account in the allocation of duty-free quotas.
• Countries with free trade agreements (FTAs): Their imports will be subject to the quotas, although the Commission may negotiate bilateral solutions or apply specific safeguard measures.

Impact for European Capital Goods Manufacturers

The Commission’s technical report warns of effects that machinery companies should anticipate:

• Input costs: Import restrictions are projected to lead to an increase in the price of steel as an input for other sectors (estimated at 3.25% in the most restrictive scenario).
• Production and competitiveness: Economic models indicate that sectors that cannot easily substitute imported steel for European steel, such as machinery and vehicle manufacturing, could experience slight decreases in production (-1.9% in some scenarios) due to cost increases.
• Availability of supply: However, the Regulation allows the Commission to adjust quota volumes by means of delegated acts if serious supply availability problems arise in specific categories.

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Steel product categories

The 30 categories of steel products subject to the new EU measure are detailed in Annex I and II of the proposed Regulation. These categories are summarized below, grouped by their main typology:

• Flat Carbon and Alloy Steel Products: Comprises plates and strips (hot and cold rolled), magnetic plates, metallic or organic coated plates, tinplate products and quarto plates (thick plates).
• Stainless Steel Flat Products: Includes stainless steel sheets and strips (hot and cold rolled) and stainless steel quarto plates.
• Long Products (Profiles, Bars and Wire Rod): Covers commercial and light sections, concrete reinforcing bars, wire rod (unalloyed, alloyed and stainless), structural sections, sheet piling, railroad material, cold finished bars and wire.
• Tubes and Hollow Sections: Comprises gas tubes, hollow sections, seamless stainless steel tubes and a wide range of other tubes (welded or seamless), including large pipes.

The Regulation links each of these 30 categories to specific CN codes to determine whether they are subject to the quotas and the 50% tariff.

It is important to review the CN codes of imported products (listed in Annex I of the Regulation) and ensure that your external suppliers can provide “melt and pour” certification to avoid customs blockages or paying the 50% tariff once quotas are exhausted.