Tariffs: Trump doubles steel import tariffs, destabilizing the entire sector

At the European Commission, understatement is an art practiced to the extreme. A few hours after the increase in customs tariffs on steel and aluminum imports to the United States from 25% to 50%, the European Commissioner for Trade, Maros Sefcovic, commented on the implementation of Donald Trump's decree on the global steel industry: "We deeply regret it." Then, on Wednesday, June 4, he clarified on the sidelines of a negotiation meeting at the Paris headquarters of the Organization for Economic Co-operation and Development (OECD): "This does not help the current negotiations (on all customs tariffs with the United States – Editor's note), especially since we are making progress."

For steelmakers around the world, the US presidential decree issued on Tuesday and effective Wednesday morning is bringing a storm of change to a sector already in turmoil. On May 27, the OECD warned of a "dramatic increase in overcapacity, (which) threatens the stability of the steel market, employment and decarbonization plans . " "Excess capacity is expected to reach 721 million tonnes (Mt) by 2027, or about 290 Mt more than the cumulative steel production of OECD countries in 2024," notes the international organization.

The main culprit: China, producer of half of the world's steel , which is consolidating its dominant position with subsidies. Until now, its overcapacity was absorbed by its strong domestic demand. But the hunger for steel has subsided both globally and at home. Hence Donald Trump's tariff response. "These new tariffs will be more effective in combating the excess of cheap production from foreign countries, which is undermining the competitiveness of the US steel and aluminum industries," he explained, admitting in passing that the previous 25% surcharge had failed to ensure the sustainability of made-in-USA production.

In Europe, steel groups, led by ArcelorMittal , fear that polluted and highly subsidized Chinese steel will find an outlet on the Old Continent. Hence their request to accelerate the implementation of the European support plan , outlined last March, based on strengthening the mechanism for blocking imports of non-decarbonized steel, on a further increase in customs tariffs to counter overcapacity, as well as on increasing public aid for employment and the energy transition.

A logic of protectionism that forgets that European multinationals themselves play a role in global destabilization. "Like ArcelorMittal, (they) organize competition between workers and territories on a global scale, seeking to produce where social, fiscal and environmental standards are the weakest, in order to then sell on the markets where demand is the most solvent. This logic leads to the deindustrialization of Europe and the deterioration of its trade balance," emphasize economists Tristan Auvray and Thomas Dallery.

As for their financialization strategy, it "directs decisions towards a search for immediate profit and shareholder remuneration, to the detriment of productive investment and employment." According to their work, only a nationalization of ArcelorMittal, coupled with protections and decarbonization, could get European steel out of the rut.