US 25pc blanket tariffs, expected later today, could affect around 15pc of EU hot-rolled coil (HRC) exports, according to latest data for 2024. This will depend on whether the current quotas system is replaced, and if exclusions are again granted.
The EU exported 325,843t of HRC in January-November 2024 to the US, out of total exports of 2.16mn t. Currently the EU is one of few exporters that are subject to tariff-rate quotas, of around 270,000 t/yr for HRC, divided by country. Any material imported above the quotas is subject to a 25pc tax. In addition, exclusions from the measures in the US have been granted to specific buyers for a total of just under 200,000 t/yr of EU HRC.
EU cold-rolled exports to the US in the same period amounted to 229,851t and hot-dipped galvanised to 386,082t, 19.2pc and 14pc of the total, respectively. Rebar and wire rod exports constituted 15.8pc and 12.2pc of the total each.
Market participants said this morning that assessing the impact of such measures is impossible without details if the quotas will remain in place. The move is however likely to weigh on the European market, which has already been experiencing slowed demand. One trader noted that most of the bloc's flat steel exports are specialties, for which there are no alternatives available in the US market, and as such will be subject to exclusions.
Most notably, protectionist measures from the US are likely to incentivise the European Commission, which is currently conducting a review of its steel safeguard measures, to be more stringent with it. The commission is examining the effectiveness of its tariff-rate-quotas, imposed in 2018 as a response to the US' Section 232 measures, which were expected to divert steel destined to the US to the EU instead. The outcome of the review is expected by 31 March.
The commission said today that it would not respond to "broad announcements without details or written clarification". But there is no justification for the imposition of tariffs on its exports and the EU will "react". The commission further noted that the imposition of tariffs would be "unlawful and economically counterproductive, especially given the deeply integrated production chains of the EU and US".
Speaking to public television, French foreign minister Jean-Noel Barrot said Europe will "react" as it did in 2018, adding that the commission had given assurances that it would act once at the right moment. "The moment has come," Barrot said.
