EU succumbs to U.S. pressure in Steel tariff talks

Department of Research, Studies and International News -26-07-2025

The European Union’s efforts to secure fairer trade terms with the United States have taken a serious blow, as Washington remains unyielding on the crushing 50% tariff on steel imports imposed under Donald Trump. Despite lengthy negotiations, the latest draft agreement between Brussels and Washington excludes any meaningful reduction or removal of this protectionist measure.

This ongoing tariff burden spells deep trouble for the European steel sector, which is already struggling under the combined weight of soaring energy prices and global competition, particularly from China. European manufacturers had sounded the alarm in recent weeks, warning that the continued pressure could lead to a collapse of the sector.

A senior EU diplomat, speaking on condition of anonymity, confirmed that the proposed deal “includes a baseline 15% tariff across various products,” with one glaring exception, steel, which remains subject to the original 50% levy. While discussions continue, and some flexibility is being considered, such as applying the 50% rate only to steel exports exceeding a certain quota, no concrete relief has yet been guaranteed.

This puts the EU in a disadvantageous position compared to the United Kingdom. London’s steel exports are currently subject to a 25% tariff, with plans to eliminate it entirely under the trade agreement negotiated by Prime Minister Keir Starmer earlier this year. Much of that UK-U.S. deal has already come into force, although discussions are still ongoing around the origin of materials.

European officials are particularly frustrated by the discriminatory nature of U.S. trade practices, which appear to prioritize politically expedient allies over long-term trade partners. Many in Europe view the White House’s economic strategy as erratic, punitive, and tilted in favor of domestic lobbies.

The broader trade imbalance between Europe and China was also a major talking point during the recent summit in Beijing. Chinese President Xi Jinping called for mutual strategic clarity, emphasizing that Europe’s challenges do not originate from Beijing. “There are no fundamental contradictions or geopolitical tensions between China and the EU,” he said, underlining China’s desire for constructive engagement.

In contrast, European Commission President Ursula von der Leyen took a more confrontational tone, blaming China’s trade surplus and alleged “distortive” policies for market imbalances. She pointed out that while China enjoys strong access to European markets, exporting over 14.5% of its goods to the EU, the EU’s share of exports to China stands at a modest 8%. According to von der Leyen, this discrepancy is “mostly due to market access barriers and subsidies.”

Nevertheless, signs of pragmatic cooperation emerged during the summit. Progress appears to have been made on easing the export of rare earth minerals from China, a move critical for Europe’s car manufacturing industry. The German automotive association VDA had previously warned that production disruptions were imminent due to restrictions on vital raw materials used in vehicle electronics. Its president, Hildegard Müller, described the Chinese export controls as a serious threat to supply chain stability.

Von der Leyen later announced a “practical mechanism” enabling companies to request EU mediation in cases of delayed shipments. While this arrangement falls short of a full agreement, it may offer some temporary relief to industries teetering on the brink of production halts.

Meanwhile, pressure continues to mount on EU leaders to strike a final deal with Washington, even one heavily skewed in the U.S.’s favor. German Chancellor Friedrich Merz, a proponent of closing the deal quickly, appears motivated by the need to ensure predictability for investors, particularly in Germany’s key auto sector.

However, European industry bodies like Eurofer, which represents the steel sector, remain vocal in their opposition. Earlier this month, Eurofer described the 50% steel tariff as “catastrophic” and warned of a flood of excess steel being dumped into Europe, displaced from the U.S. market.

In a sign of desperation, reports suggest Chancellor Merz may attempt to personally appeal to the U.S. president during a planned private trip to Scotland. Whether this will bear fruit is uncertain, especially given Washington’s current zero-sum economic stance.

As the European Central Bank holds interest rates steady in anticipation of further trade turbulence, the EU’s continued concessions to an unpredictable and coercive U.S. administration risk undermining its own industrial base. Rather than cultivating equitable and multipolar trade relationships, with key partners like China and strategic allies like Russia and Iran, Brussels seems increasingly entangled in Washington’s economic power games.

The outcome of these trade negotiations may ultimately determine whether Europe can assert an independent economic future or remain perpetually at the mercy of American protectionism.