10 Key Takeaways of the European Steel and Metals Action Plan

On 19 March 2025, the European Commission ("Commission") unveiled its European Steel and Metals Action Plan ("Steel and Metals Plan"), outlining the short and medium-term work program aimed at enhancing the competitiveness of the European steel and metal industries.

The plan is an unprecedented sector-specific initiative that underscores the necessity of a competitive steel and metal industry for realizing Europe's industrial ambitions, both in terms of decarbonization and defence. In this sense, the Commission has explicitly connected the Steel and Metals Plan with the Clean Industrial Deal, the Action Plan for Affordable Energy, as well as the White Paper for European Defence – Readiness 2030 which was presented on the same date as the Steel and Metals Plan.

The Steel and Metals Plan aims to update current EU legislation by either amending existing laws, introducing new provisions to address gaps identified by the Commission, or strengthening the Commission's practices to better protect the European steel and metals industry. The key takeaways from the plan for expected changes are summarized below.

1. Strengthening Steel Safeguards and Paving the Way for Innovative Trade Defence Measures
2. Protecting European Aluminium Industry
3. Possibly Protecting European Ferroalloy industry 
4. Revamping the EU's Current Trade Defence Toolbox
5. Introducing the "Melt and Pour" Rule
6. Potential Reinforcement of EU Sanctions on Primary Aluminium from Russia
7. Addressing Carbon Leakage for Goods Exported to Third Countries
8. Expansion of the EU's Carbon Border Adjustment Mechanism ("CBAM")
9. Addressing CBAM Resource Shuffling
10. Ensuring Scrap Availability
    
    

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1. Strengthening Steel Safeguards and Paving the Way for Innovative Trade Defence Measures

The Commission plans a two-step action in response to the growing steel overcapacity and the United States' introduction of the 25% import tariffs on steel and aluminium.

As an immediate measure, the Commission tightened the steel safeguard quotas in product categories experiencing the highest import pressure alongside a decrease in demand. The regulation revising the steel safeguards¹ provides for a reduction of the rate of liberalisation of tariff rate quotas from 1% to 0.1%; eliminates for certain products the 'carry-over' mechanism, which allowed countries to roll over unused quotas to the next quarter, and makes a number of other adjustments aimed at reducing the level of imports.

In the long term, the Commission will replace the current steel safeguard tariff quotas, which are scheduled to expire on 30 June 2026, with a new trade measure. According to the Steel and Metals Plan, the new trade measure will provide a "highly effective level of protection" against negative trade-related effects caused by global overcapacities, suggesting that the current tariff quotas can be replaced by a more robust trade defence instrument. It is expected that the new trade measure will serve as an exceptional tool aiming at protecting the EU steel market and will affect all EU trading partners. The Commission plans to make a proposal for the new trade measure by the third quarter of 2025 at the latest.

2. Protecting European Aluminium Industry

The Steel and Metals Plan covers not only steel, but also other metals, such as aluminium and ferroalloys.

As far as aluminium is concerned, the Steel and Metals Plan mentions a deteriorating situation of the EU aluminium producers and announces the start of evidence-gathering to use trade defence instruments, including launching a safeguard measure investigation. While this announcement falls short of the rumored immediate initiation of the safeguard investigation into aluminium imports² the Steel and Metals Plan makes it clear that such an investigation, possibly leading to curbs on imports, will be initiated immediately after the duly substantiated request is made. It is expected that the Commission will initiate the safeguard investigation into aluminium imports in the near future.

3. Possibly Protecting European Ferroalloy industry

Furthermore, the Commission is currently running a safeguard investigation into imports silicon metal and ferroalloys that may equally result in curbs on imports. The Steel and Metals Plan commits to finalize this investigation by 18 November 2025. It mentions that the Commission will not hesitate to take additional protection measures, should they be considered necessary as a result of this investigation. It is understood however that the earlier version of the Steel and Metals Plan called for a much swifter completion of the investigation in an expeditious manner and made an explicit finding that sharply increased imports are responsible for a decrease in the EU production. The final version of the Steel and Metals Plan does not reflect this language, thus suggesting that any action to limit imports of silicon and ferroalloys may be pre-mature at this stage.

4. Revamping the EU's Current Trade Defence Toolbox

The Steel and Metals Plan announces several potential changes to the existing EU trade defence practices.

First, traditionally, the Commission has been cautious about initiating and imposing antidumping and anti-subsidy measures based on allegations of threat of injury. It now considers that the global overcapacities in steel and metals alone pose a sufficient threat to the EU industry, justifying the initiation of trade defence investigations even before the actual injury occurs to the EU steel and metals industry.

Furthermore, the Commission aims to depart from application of the lesser duty rule, under which the rate of the anti-dumping duty is based on the dumping margin, unless a lower rate would remove the injury. This rule is not binding upon WTO Members and its application is optional. Thus far, the European Union has consistently adhered to the lesser duty rule unless specific circumstances justify otherwise. In contrast, major trading partners like the United States and China have not incorporated the lesser duty rule into their legislation and, as a result, tend to impose higher trade defence measures. The Steel and Metals Plan states that the Commission will assess whether the current Lesser Duty Rule regime requires changes meaning in practice that the entire rule may be scrapped altogether, leading to considerably higher antidumping duties charged on imports.

5. Introducing the "Melt and Pour" Rule

In a potentially far-reaching development the Steel and Metals Plan requests the Commission to assess whether the melt-and-pour rule could be used to counteract circumvention of trade defence measures. Under the melt and pour rule, the origin of metal refers to the country where it was first produced in a liquid state and then cast into a solid form, regardless of the place of subsequent transformation and the origin of the good as determined by the traditional non-preferential rules of origin. The stated purpose of the melt and pour rule is to prevent granting origin to a product which, through relatively insignificant transformations, would avoid the application of trade defence measures.

The melt-and-pour rule has notably gained traction following its introduction in the United States³ although in the EU the Commission has also recently applied this rule to strengthen the monitoring (albeit not enforcement) of exemption requests accepted in the context of the EU anti-circumvention investigation.⁴

Given that the melt-and-pour rule is legally controversial, the Steel and Metals Plan requests the Commission at this stage only to the assess its introduction to trace the country where the metal good was originally melted and poured. This should be contrasted with a call in the earlier versions of the plan to implement the melt and pour rule immediately in the EU trade defence measures to actually determine the origin of the metal subject to the measures.

6. Potential Reinforcement of EU Sanctions on Primary Aluminium from Russia

Following the inclusion of a ban on EU imports of primary aluminium from Russia in the 16th package of sanctions, the Steel and Metals Plan suggests that the Commission may implement additional measures to prevent circumvention of this ban. Anti-circumvention measures could potentially include a prohibition on importing or purchasing products in the European Union that are processed in a third country using aluminium inputs originating from Russia, similar to the existing prohibition on iron and steel inputs from Russia.⁵

7. Addressing Carbon Leakage for Goods Exported to Third Countries

Currently, the EU's Carbon Border Adjustment Mechanism ("CBAM") addresses only carbon leakage related to domestic consumption in the European Union, but does not account for carbon leakage related to exports. Carbon leakage in export markets occurs when products from jurisdictions with more stringent climate regulation, such as the European Union, are unable to compete in global markets, and are replaced by products from jurisdictions that have no or lesser carbon constraints. In response, the Steel and Metals Plan announces the publication by 2Q2025 of a communication that would provide options on how to address the carbon leakage for CBAM goods exported from the European Union. Given constraints imposed by the WTO rules, a likely solution is likely to consist of additional supports for export-oriented sectors without however making such supports contingent on exportation.

8. Expansion of the EU's CBAM

The Commission has identified two types of circumvention of the CBAM, which are highlighted in the Steel and Metals Plan as urgent and key elements of the CBAM reform to be initiated by a legislative proposal to be made by Q4 2025.

First, because the CBAM does not cover all goods, some carbon-intensive imports circumvent the mechanism by entering the European Union as finished products. Consequently, the Commission is planning to expand the product scope of the CBAM to include specific steel and aluminium downstream products. In October 2024, the Commission conducted a survey on the potential extension of the CBAM scope to downstream products.⁶ These products may potentially include automobile components, household appliances, packaging (e.g., cans, food packaging), electrical goods (e.g., cables), and building and construction goods.

9. Addressing CBAM Resource Shuffling

The second type of circumvention identified by the Commission concerns a practice called resource shuffling, where only goods with lower carbon footprint are exported to the EU under the CBAM, while more carbon intensive goods are shipped to other markets. It is understood that potential solutions could include an explicit prohibition of resource shuffling in the CBAM regulation, drawing on the example of California's greenhouse gas cap-and-trade market for electricity imports.⁷ Additionally, the Commission may require importers suspected of circumvention to disclose the carbon intensity of all shipped products and impose fines if resource shuffling is confirmed.

10. Ensuring Scrap Availability

Steel scrap is an important input used in the manufacturing of steel. The Steel and Metals Plan tasks the Commission to consider proposing, by third quarter of 2025, a trade measure targeted against metal recycling subsidies in third states, which hamper export of scrap to the EU. The Commission will also assess the possibility of introducing a reciprocity rule to counter the trade restrictions on export of scrap to the European Union market. Export fees or duties to increase the availability of scrap are not off the table and will