The European Union is poised to enact significant measures to protect its aluminium and steel industries.

Summary:

• EU is considering import limits on aluminium due to concerns that US tariffs will divert metal flows to Europe.
• It plans to impose duties on its own scrap metal exports to ensure domestic industries have access to essential raw materials.
• It will introduce new trade measures for steel, which will be announced on Wednesday.

According to an article published on Financial times, this action is driven by concerns over the potential diversion of metal flows due to newly imposed US tariffs. The European Commission is considering imposing import limits on aluminium and export duties on scrap metals, signaling a strong move to safeguard domestic producers against a burgeoning global glut.

The impetus for this action stems from US President Donald Trump's recent decision to increase tariffs on steel and aluminium imports to 25%. This move has sparked fears within the EU that a surge of aluminium, initially destined for the US, will be redirected to European markets, exacerbating existing challenges faced by EU producers.

The draft EU plan reveals that the Commission is contemplating curbs on aluminium imports to mitigate the anticipated influx. This comes alongside a proposed imposition of duties on the EU's own scrap metal exports, aimed at securing vital raw materials for the domestic industry. The Commission is reportedly weighing export duties of up to 25% on scrap metal.

"EU producers lost substantial market share over the last decade and, in addition, around 50% of primary production capacity remains curtailed since 2021," the draft document states according to FT. "The recently announced US tariffs on aluminium are likely to worsen the situation further with a significant threat of trade diversion from multiple destinations."

In addition to aluminium, the EU is also addressing the steel sector. The Commission plans to introduce a new trade measure for steel, based on "tariff rate quotas," to replace existing safeguards expiring on July 1, 2026. This measure aims to provide continued protection against global competition, particularly from China.

To further tighten trade defenses, the EU will implement a "melted and poured rule." This rule is designed to prevent importers from circumventing tariffs by performing minimal transformations on metal originating from countries subject to levies, effectively ensuring that the metal's true origin is recognized.

Furthermore, the EU will extend its Carbon Border Adjustment Mechanism (CBAM) to products made from metals, ensuring that imports reflect the carbon costs borne by EU producers. This move aims to level the playing field and incentivize cleaner production practices.

The Commission's actions are part of a broader "Clean Industrial Deal" aimed at reviving EU industries and maintaining competitiveness against global rivals. The steel and metals action plan, slated for official announcement on Wednesday, is a key component of this strategy.