• The EU plans to halve steel import quotas and impose a 50% tariff on excess shipments.
• This move is viewed as a potential "biggest crisis" for the UK steel industry, which heavily relies on EU exports.
• Automakers are concerned about the inflationary impact and increased costs due to stricter steel import regulations.
• The UK industry has called for urgent negotiations with the EU to secure exemptions.
• The EU aims to protect its steel sector from global overcapacity and subsidized imports, notably from Asia.

The European Commission has proposed a substantial reduction in steel import quotas, aiming to cut them by nearly 50% to 18.3 million tonnes annually and implement a 50% tariff on excess imports. This initiative seeks to bolster the steelmaking industry within the EU, which has faced challenges from rising imports and U.S. tariffs, leaving producers operating at only 67% of their capacity. The proposed measures must receive approval from EU governments and the European Parliament before implementation in June 2026, according to Reuters.

This decision has triggered significant concern within the UK's steel sector, particularly since nearly 80% of UK steel products are exported to the EU. Industry leaders have labeled the proposed tariffs as potentially leading to "perhaps the biggest crisis" the UK steel industry has ever faced. Gareth Stace of UK Steel highlighted that the move could result in the loss of thousands of jobs within the sector, which had already seen declines due to global overcapacity and price undercutting, as reported by BBC and Al Jazeera.

The European Automobile Manufacturers' Association (ACEA) also expressed concerns, indicating that the new steel import regulations could lead to increased production costs for car manufacturers, who depend on steel sourced largely from within the EU. ACEA Director General Sigrid de Vries stated that higher input costs could adversely affect the automotive industry, calling for a reevaluation of the balance between protecting steel producers and the needs of steel-consuming industries, according to Reuters.

As the UK braces for the potential economic fallout from these measures, the government has initiated discussions aimed at securing some form of exemption or quota allocation for British steel. The Department for Business has emphasized the urgency of clarifying the impact of the proposed tariffs on UK's trade relations with the EU. UK industry leaders are advocating for immediate negotiations to mitigate any detrimental effects on the domestic steel market, with fears that diverted steel from EU markets could further threaten the sector, as noted by Al Jazeera and BBC.