By international affairs specialist Glen Hodgson of Swedish think tank Free Trade Europa
In the Taoist text The Liezi, attributed to Lie Yukou, it is said that to solve a problem, one must remove its cause, not merely treat its symptoms. This wisdom has unfortunately been ignored in the formulation of strategy for the European steel sector.
Despite the fundamentally flawed premise, tougher steel safeguards in Europe were approved late on 13 April. Heavy lobbying by the European steel industry during the trilogues—tripartite meetings between the European Parliament, Council, and Commission—on the Proposal for a Regulation addressing the negative trade-related effects of global overcapacity on the Union steel market may lead Europe down a costly and misguided path.
While EU policymakers were quick to celebrate the agreement on these measures, the reality is that Europe is addressing symptoms rather than causes. What is needed is a genuine, full value-chain approach. The steel sector must articulate a credible vision for its current and future competitiveness instead of relying on protectionist appeals. By attempting to resolve upstream sector challenges in this way, Europe risks undermining the competitiveness of downstream industries. This approach amounts to little more than kicking the can down the road: it offers no real solution, instead postponing the deeper, structural problems that will inevitably continue to grow.
Rising Costs for European Industry
Regrettably, the new steel measures—combined with the Carbon Border Adjustment Mechanism (CBAM) and the phase-out of free EU Emissions Trading System (ETS) allowances—are likely to increase steel prices across the EU for both domestic and imported products. This, in turn, will raise manufacturing costs, reducing the competitiveness of European industry both within the EU and in global export markets.
These concerns are already reflected in the data. EU steel prices have been rising since the announcement of the new measures and are expected to increase further when they enter into force in July.
The European Union reached a preliminary deal to nearly halve imports of steel and impose tariffs of 50% on excess shipments to protect the bloc's steel industry from overproduction elsewhere. More here: https://t.co/S7jqtEX4zs
— Reuters Business (@ReutersBiz) April 14, 2026
Propping Up an Ailing Sector
The core issue remains unaddressed: in many respects, the EU steel industry is structurally uncompetitive. Moreover, “green steel” cannot be treated as a panacea for the European economy. It faces significant economic and practical constraints that limit both its scalability and competitiveness.
Low-carbon steel production—primarily through direct reduced iron using green hydrogen or through extensive electrification—requires vast and sustained supplies of renewable energy and hydrogen at industrial scale. The EU is unlikely to guarantee such resources in the near to medium term without substantial investment in grid infrastructure and generation capacity.
Higher production costs for green steel will also increase prices for energy-intensive industries, raising the risk of carbon leakage as production shifts to regions with lower costs and less stringent climate policies. For an EU economy already facing intense global competition, sharply rising input costs will erode competitiveness, deter investment, and potentially threaten jobs across the broader manufacturing supply chain.
In short, betting Europe’s industrial future on a capital-intensive technology with uncertain commercial viability and unresolved supply-chain challenges is a risky strategy.
Avoid Making a Bad Situation Worse
Although the steel safeguards are now set, Europe must move beyond selective, sector-specific firefighting and adopt a holistic view of value-chain competitiveness in the steel sector. Legislators have offered protection to the European steel industry, shielding it from international competition, while overlooking its lack of a credible strategy for modernization and global competitiveness.
Without a shift in approach, European business—and the broader economy—risks becoming the ultimate casualty of this misguided policy.
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