The European Commission is set to announce the extension of trade safeguards for the steel sector, along with the possibility of permanent measures to protect the European market, in light of recent developments in global trade dynamics.

Affected by U.S. tariffs imposed on steel by former President Donald Trump and the significant overproduction of steel in China, these measures aim to bolster the competitive standing of the EU steel and aluminum industries.

The announcement is expected to occur in the third quarter of the year, as part of a broader plan to address the challenges faced by the metals sector.

Back in 2018, amid the first trade war with the United States, the European Union implemented safeguards for its steel sector.

These included import quotas, beyond which tariffs would be applied.

These temporary measures are set to expire in June 2026. The EU's executive believes there is a need to strengthen and extend these protections permanently, indicating that the structural overcapacity affecting global trade is unlikely to diminish by the 2026 deadline.

According to the draft plan, "It is not reasonable to assume that the structural overcapacity will disappear by July 1, 2026. Instead, it is likely that negative trade effects will worsen, as more countries adopt measures to limit imports, making the EU market the primary receiver of global overcapacity."

Brussels describes the situation as "exceptional," advocating for a suitable level of border protection to ensure a competitive and sustainable EU steel industry.

Furthermore, new investigations into the aluminum market will be initiated to assess the impact of U.S. tariffs on this sector, building on a prior investigation into the steel sector initiated in December.

Recent reports indicate significant increases in aluminum imports to the EU, which has forced the industry to halt much of its production capacity.

The EU's production levels have not rebounded since the pandemic, with 2023's steel production reportedly being the lowest on record excluding the years affected by the health crisis.

This situation has been exacerbated by high energy prices and weak demand.

The Commission highlights that U.S. tariffs on aluminum may also pose a considerable threat of trade diversion, leading producers to redirect their products to the EU market, which consists of 27 countries and 450 million consumers.

To address potential evasion of trade safeguards by exporters, the Commission has devised a new protocol for tracking incoming products.

This initiative is intended to prevent exports from countries with tariffs being re-labeled from countries without tariffs.

New regulations will classify the origin of metal products based on their original smelting location rather than subsequent processing locations.

In summary, the EU's planned measures reflect ongoing tensions in international trade, particularly relating to U.S. tariffs and the rising capacity issues originating from China.

The Commission seeks to fortify its steel and aluminum industries against the evolving global trade landscape, as well as ensure proper enforcement of safeguards designed to maintain fair trade practices.