EU seeks to weld itself to the US with anti-China steel measures

Good morning. Belgium is under increasing pressure to ease its opposition to a proposed €140bn financial lifeline to Ukraine based on immobilised Russian sovereign assets, as other EU capitals fret that time is running out to secure Kyiv’s financial future.

Citing the potential risk of Russian retaliation for using the assets, which are held by the Brussels-based clearing house Euroclear, the government of Prime Minister Bart De Wever is demanding the rest of the EU provide financial guarantees to cover the loan.

But other capitals chafe at Belgium’s assertion that, having enjoyed the benefits of Euroclear, it now wants everyone else to cover the risks — and point out that given Kyiv’s dire situation, all its allies must do whatever they can. EU ambassadors will continue discussions on the issue today.

Here, our trade and energy correspondents explain how the EU’s new steel protection measures are designed as US outreach, and Europe’s plastics lobby group warns that the industry is “in crisis”.

Welded together

Brussels proposed 50 per cent tariffs on most steel imports worldwide yesterday in a first step aimed at reducing US levies on its own metal, write Andy Bounds and Alice Hancock.

Context: US President Donald Trump has kept in place his 50 per cent tariffs on EU steel and aluminium despite reaching a preliminary trade deal with the bloc in summer. The EU hopes its own action, partly aimed at locking out Chinese production, will convince Trump to lower them.

“This proposal . . . is going to be a very good basis for us to engage with the United States, where we can say that we now have a system of protection of the steel industry that is very strong,” said a senior European Commission official. 

“It allows us to have a discussion with the United States on ringfencing the problem of overcapacity,” they added. 

Washington claims that the EU exports some Chinese steel after mildly transforming it in the bloc, in order to skirt anti-dumping duties. The proposal now includes a “melted and poured” rule, recording the origin of the steel where it was originally melted, independently of further processing.

Maroš Šefčovič, EU trade commissioner, said he wanted to work with other like-minded countries to keep out steel from states that overproduce. “We can take on the global overcapacity much more efficiently if we do it together,” he said during a press conference.

Those who collaborate could receive higher tariff-free quotas, officials said.

“We remain committed to a rules-based trade system and our global network of free trade agreements, including with key steel-producing countries. But we must also act decisively to defend our interests.” said Šefčovič.

Šefčovič will discuss the issue with G20 ministers in South Africa on Friday.

Chart du jour: Slowdown

Donald Trump’s tariffs will sharply slow down the growth of global goods trade in 2026, but the full impact of US trade policy will be felt later than previously thought, the World Trade Organization has found.

Melting

The plastics industry is “in crisis” with revenues falling 13 per cent in 2024 compared to 2023, the head of its industry body tells Alice Hancock.

Context: Industries across the EU are battling a challenging landscape of US tariffs, high energy costs, cheap competition from China and red tape thanks to the EU’s ambitious but bureaucratic legislative agenda. Many are calling for urgent action from the commission to improve the outlook.

Virginia Janssens, managing director of Plastics Europe, which represents 90 per cent of the plastics industry, said that things were particularly bad for her sector.

“Europe’s plastics industry in Europe is at a cliff edge and we are asking European but also member states, governments, to really help us [with] more urgent action to restore our competitiveness,” Janssens said.

In annual figures published today and previewed by the Financial Times, Plastics Europe said that revenues had declined almost 13 per cent from €457bn in 2022 to €398bn in 2024.

The European plastics industry has also dramatically lost market share compared to global competitors, from 22 per cent in 2006 to 12 per cent in 2024. China’s market share is now nearly three times that of the EU manufacturers.

A major concern for Plastics Europe is that efforts to improve the production of recycled plastics have flatlined. “That’s really a painful point,” said Janssens. The industry needed revenues to invest in recycling and circular plastics production but that would not happen without government support, she said.

“It’s a completely different manufacturing production model that we’re talking about,” Janssens said.

The commission is due to present a circular economy act before the end of the year.

What to watch today

1. Greenland’s Prime Minister Jens-Frederik Nielsen addresses the European parliament.

2. European Commission executive vice-president Henna Virkkunen gives a press conference on the EU’s new artificial intelligence strategy.

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