Fixing the share: Europe's steel quota and the range it can move in
The European Union carries an annual tariff quota for the entire Union of 612 tonnes of non-grain-oriented electrical steel (NGOES); a type of steel used in electric motors and transformer cores. For hot rolled steel the quota is 5,198,754 tonnes[1].
The regulation uses the 2013 import share to set Union steel import quotas. The range within which that access can lawfully be adjusted is built from the same reference.
A tariff quota works by restricting imports beyond a fixed volume; anything beyond that volume will pay the out-of-quota duty. From 1 July 2026 Regulation (EU) 2026/1384 applied which was adopted 17 June 2026 under Article 207(2) TFEU by the ordinary legislative procedure[1]. The previous Regulation (EU) 2019/159 had definitive safeguard measures on certain steel imports from 31 January 2019 and expired 30 June 2026[2]. It expired after eight years as that is the maximum duration for a safeguard measure[3]. The new measure states a total annual quota of 18,345,922 tonnes across 30 quota lines and raised out-of-quota duty from 25% to 50%[1]. The EU consumption of steel in 2024 was 143.9 million tonnes[4].
According to Recital 18, the portion of imports in 2013, around 13%, are applied to overall consumption in the EU steel market in 2024. The result is 18,345,922 tonnes. Due to import bans, Belarus and Russia are excluded from the base of the calculation[1]. Article 5(1)(a) requires the Commission to take "tariff quota levels equivalent to the import market share that prevailed in the Union steel market in 2013" into account as applicable[1]. What that means is that the 2013 import distribution is used to distribute the total allowance between countries in 2024. Recital 24 states that 2013 is thought to be the most appropriate basis for country distribution, unaffected by overcapacity that surged in 2015 and could already be seen in 2014[1]. Total volume and country distribution are set by the same 13-year-old number.
Article 8(1) empowers the Commission to amend the volumes of the quota without new legislation within a range from 14.4 million tonnes to 22.2 million tonnes[1]. Recital 28 states the maximum stems from applying the 13% market share to 2018 consumption, the highest annual level between 2013 and 2024. The same Recital states that the minimum was determined by the need for equivalent flexibility downwards[1]. The new regulation is not a safeguard measure and according to Recital 10 "global overcapacity is a structural problem unlikely to be resolved in the short or medium-term."[1] The Commission's delegated power under Article 8 is tacitly extended in periods of five years unless there is an objection by Parliament or Council[1]. Moving beyond the limits set over a decade ago requires amending the regulation as a whole, meaning Parliament and Council need to agree.
In addition to the 50% out-of-quota duty, other duties apply. This means that MFN duty, anti-dumping duty, countervailing duty, and the out-of-quota duty can combine[1]. CBAM, the Carbon Border Adjustment Mechanism, also applies from 1 January 2026 to iron and steel among other sectors[5]. Steel is a vital resource to large parts of the secondary sector like machinery builders, automotive suppliers, and construction. Meanwhile, Article 8(1)(f) requires the Commission to take into account the availability of supply linked to insufficient capacity and related prices negatively impacting EU downstream industries. Recital 29 states that Union interest includes upstream and downstream industries as well as consumers[1]. From 1 July 2027, Article 3(5) has the Commission adopt implementing acts determining whether carry-over of unused quota volumes between quarters applies for each product category. Insufficient availability of supply for downstream steel users is one factor in that decision[1]. The Commission considers these factors for its decision within Article 8(1)'s range. None of them change the range.
EU steel production capacity utilisation was 67% in 2024. Union producers' market share was 79.0% in 2024[4]. An overcapacity of 602m tonnes in 2024 rising to a forecast 721m by 2027 is facing the EU market. In the meantime more than 30 million tonnes of EU capacity have been lost since 2018[1]. At 67% utilisation there is idle EU capacity. Restricted imports could be met from domestic production rather than raising costs to buyers. This substitution would have to match product, grade, and location.
By 31 December 2026, the Commission assesses whether to extend product scope to cast iron tubes, alloy steel wire, stainless wire, and certain forged bars. By 30 June 2027 it is decided, under Article 12, whether to include all products made of or containing a significant amount of steel[1]. From 1 July 2027 carry-over is decided per category, taking into account average use of the quota during the first three quarters, in particular where it is above 80%[1]. The Commission reviews the regulation's scope and carry-over in 2027 and its effectiveness in 2029[1]. The share it is built on is fixed at 2013.
Notes
[1] Official Journal of the European Union, "Regulation (EU) 2026/1384 of the European Parliament and of the Council of 17 June 2026 addressing the negative trade-related effects of global overcapacity on the Union steel market and amending Regulation (EU) 2020/2170," 24 June 2026.
[2] Official Journal of the European Union, "Commission Implementing Regulation (EU) 2019/159 of 31 January 2019 imposing definitive safeguard measures against imports of certain steel products," 1 February 2019. http://data.europa.eu/eli/reg_impl/2019/159/oj
[3] World Trade Organization, "Agreement on Safeguards," Article 7.3. https://www.wto.org/english/docs_e/legal_e/25-safeg_e.htm
[4] Official Journal of the European Union, "Commission Implementing Regulation (EU) 2025/612," 25 March 2025, Tables 1 and 2. http://data.europa.eu/eli/reg_impl/2025/612/oj
[5] Official Journal of the European Union, "Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism," 16 May 2023, as amended. http://data.europa.eu/eli/reg/2023/956/oj
Image credit: Morteza Mohammadi, Unsplash
Continental is a biweekly column on European economics by Felix Schmidt. New issues appear on Substack first and on the International Economics Post within 48 hours.
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