ISTANBUL

The European Automobile Manufacturers' Association (ACEA) stated Wednesday that the new EU plan to reduce import quotas and raise tariffs outside of quotas to protect the steel sector would have inflationary effects across the continent.

"Automobile manufacturers source approximately 90% of their direct steel purchases in the EU and are most concerned about the inflationary impact that an effective continuation of the safeguard will have on European market prices," ACEA said in a statement.

The association noted that the changing of key safeguard parameters, especially the "dramatic" lowering of quotas and the doubling of the out-of-quota tariff to 50%, will "significantly" reduce the possibility to relieve pressure in the European market through imports.

"In addition, a new rule of origin based on the 'melt and pour' principle will restrict imports further and create a massive administrative burden for European users of imported steel products," it said.

The ACEA emphasized that the EU Commission should also evaluate the special situation of sectors that have to import certain quantities and qualities of steel, such as the automotive sector.

"Quotas for automotive grades have always been rapidly exhausted under the last seven years of the safeguard. The Commission also needs to understand the complexity of applying the 'melt and pour' rule of origin in deep and global supply chain such as automotive," it added.

EU's steel industry plan

The European Commission on Tuesday announced that it plans to raise steel tariffs and sharply cut import quotas, seeking to offer “strong and permanent protection” to the EU’s steel industry.

The plan calls for raising tariffs to 50% on any surplus imports and limiting tariff-free import levels to 18.3 million tons annually, which is a 47% decrease from 2024 steel limits.

The EU Commission said the plan will replace the steel safeguard measure that is set to expire by June 2026.

"It responds to the call from EU workers, industry, several Member States, Members of the European Parliament, and stakeholders to offer strong and permanent protection to the EU steel industry, with a view to safeguarding EU jobs, and supporting the sector in its decarbonization efforts," the commission added.