BRUSSELS — The European Union’s executive arm on Tuesday proposed a sharp increase in steel tariffs as it raced to protect the bloc’s steel industry from Chinese competition, a move that is likely to impose painful costs on Britain and other close trading partners.
The European Commission’s proposal would slash the amount of steel that can be imported without incurring tariffs to 18.3 million tons per year, a nearly 50% reduction from the 2024 quota.
At the same time, it would double the tariff on steel imported above that quota, pushing it to 50%.
The goal is to hit back against global overcapacity, as cheap steel imported from China and elsewhere gains market share in Europe and costs steelworker jobs across the 27-nation bloc.
The commission’s move is also a reaction to America’s recent steel tariffs, which have imposed levies on imports of 25% for Britain and 50% for steel from other countries. Those higher tariffs increase the risk that global producers will try to send their steel to Europe, where until now they have faced friendlier trade terms.
“Global overcapacity is damaging our industry,” Ursula von der Leyen, president of the European Commission, said in a statement announcing the proposal.
Yet as EU officials seek to protect their own steelmakers, the higher tariffs could come at a serious cost to some of their neighbors — most notably Britain, which voted to exit the union in 2016.
For British steel producers, the European Union is an even more important market than the United States. British producers make about 4 million tons of steel per year, according to industry data, and about half of that goes to the European Union.
The British government has emphasized that it was increasing duty-free exports of steel for building projects and other purposes, arguing that doing so would help to “rebuild Britain’s industrial strength.”
While nations will be able to negotiate how much of the duty-free quota they are allocated — creating the potential for at least some wiggle room for Britain — the 50% tariff rate above that quota would apply across the board.
“This is perhaps the biggest crisis the U.K. steel industry has ever faced,” Gareth Stace, director-general at UK Steel, an industry group, said in a statement. “Government must go all out to leverage our trading relationship with the European Union to secure U.K. country quotas.”
The British government responded with concern.
“We are pushing the European Commission for urgent clarification of the impact of this move,” Chris McDonald, the British industry minister, said in a statement.
Maros Sefcovic, the EU trade commissioner, said Tuesday during a news conference, “We will, of course, engage bilaterally with our U.K. partners on this issue.”
For European steel producers — especially in Germany, which has the bloc’s biggest steel industry — the announcement could offer some reprieve. The EU’s steel industry is the third largest in the world, according to the European Commission, employing about 300,000 people directly. It has been facing intense competition in recent years as steel from China, in particular, has flowed into global markets.
According to information released alongside the new proposal, the EU steel industry is now operating at 67% capacity, much lower than the 80% capacity that would be considered healthy.
European officials consulted with the industry over the summer before drawing up their proposal for higher tariffs and lower duty-free quotas.
While the sharp increase in tariffs could push up prices or even spur steel shortages across the bloc, officials have argued that it will spur more domestic production, offsetting those costs over time.
Thilo Brodtmann, the head of Germany’s mechanical engineering association, welcomed the move to minimize reliance on steel from China in Europe. But speaking from the perspective of a steel consumer, he warned that protective measures alone would not be enough to increase competitiveness, calling for a reduction in bureaucracy and lowering of energy costs.
“This would benefit all industries competing with China,” he said.
The new proposal shows one way in which an inward turn by the United States — which has announced tariffs across a variety of goods this year — is having global reverberations. By increasing the risk that cheap products could be dumped in Europe, higher U.S. tariffs helped to prod EU officials to make a more protectionist turn of their own.
While the European Union has long protected some strategic industries, including its farming sector, it has generally promoted a rules-based system of free trade. Now, that stance is shifting somewhat.
“It’s a clear move away from free trade and toward more protectionism,” said Carsten Brzeski, the global head of macro at ING Research. “After a long while of being a big supporter of free trade, it is now moving in the other direction, and trying to shield crucial industry.”
He said that the United States has played a major role in bringing about that shift.
“I think you can call it at least an indirect reaction to the latest stance of the U.S. government on trade,” he said.
This article originally appeared in The New York Times.