A proposed EU-US trade agreement will maintain a 50% tariff on steel imports, a significant setback for the European steel industry. The deal, outlined to member states on Wednesday, includes a 15% baseline tariff on various goods, but steel is notably exempt from reductions. This contrasts sharply with the UK's 25% tariff on British steel, scheduled to drop to zero under a separate agreement. The EU is reportedly seeking a compromise, potentially limiting the 50% tariff to steel exports exceeding a specific quota. The EU's 15% baseline tariff is also higher than the 10% agreed upon by Britain.

The situation adds to existing pressures on the European market, with high energy costs and competition from China already impacting the steel industry. The European steel body, Eurofer, previously described a 50% tariff as catastrophic. Germany's Chancellor Friedrich Merz reportedly favors a swift resolution to stabilize investors and manufacturers, particularly within the auto sector, which is also facing challenges due to restricted Chinese rare earth exports crucial for car production. The German car industry group VDA warned of potential production stoppages.

Impact Statement: The 50% steel tariff will severely impact the EU steel industry, while the higher baseline tariff compared to the UK deal further disadvantages European exporters to the US market. The situation highlights the complex geopolitical considerations influencing trade negotiations and the vulnerability of European industries to trade disputes involving China and the US.