BRUSSELS — For years, European nations have resigned themselves to the decline of their steel industries, viewing it as a natural and unavoidable process. However, this perspective is shifting as developed economies are increasingly unwilling to rely on environmentally harmful steel produced in China, Southeast Asia, and North Africa.
The ongoing issue of global steel overcapacity is not new, but U.S. President Donald Trump’s imposition of a 25 percent tariff on steel imports has altered the landscape significantly. As a result, an influx of subsidized steel from countries such as China, Indonesia, Turkey, and Egypt—nations that have been excluded from the U.S. market—is expected to flood into Europe.
Bailout measures in action
In response to this challenging situation, several governments are taking decisive steps to support their steel industries. The United Kingdom has recently re-nationalized its sole steel production facility, while the European Union has introduced a comprehensive Steel Action Plan aimed at revitalizing the sector and preventing its collapse. Australia is also investing billions to transform a steel plant into a model of green innovation.
Over the past few years, €9 billion in state aid has been allocated in the EU to bolster the industry. The Steel Action Plan intends to enhance defense research and broaden the customer base within Europe. Additionally, another €100 billion is anticipated to facilitate the scaling up of carbon-free steel production. Policy incentives will also promote the demand for more expensive yet environmentally friendly steel alternatives.
“We need to go even further,” French Industry and Energy Minister Marc Ferracci stated during a visit to the steel-producing region of Alsace. He highlighted the ongoing job cuts by steel giant ArcelorMittal, which recently announced it would reduce its workforce by around 600 positions in France.
Challenges facing the sector
Despite these initiatives, the sector continues to struggle with numerous challenges. According to steel transformation expert Boris Jankowiak from the Climate Action Network, the industry is currently reliant on fossil fuels and is not well-prepared for the future. He emphasized that merely purchasing a primary steel plant, as the U.K. government did, will not resolve issues related to energy costs, declining demand, or dependence on coal and gas.
Jankowiak noted, “All the pieces of the puzzle are there. So now it’s just about showing leadership and commitment to that transformation — also from the companies’ side.” The pressure is mounting for the steel sector to transition toward cleaner production methods and to increase recycling efforts, aligning with the EU’s broader environmental goals.
Steel production has long been a contentious issue across Europe, with plants like Italy’s Taranto works facing backlash for environmental pollution. Yet, the versatility of steel means it can be adapted to meet various societal needs. In recent years, steel has been championed as a foundational element for the green transition, powering local renewable energy initiatives like wind turbine manufacturing, rather than relying on imports from China.
The Steel Action Plan, presented by European Industry Commissioner Stéphane Séjourné, is viewed as a vital step towards achieving economic and material sovereignty for Europe. He indicated that the production of military vehicles, which require substantial steel, is part of the broader strategy to bolster the domestic steel industry.
Germany, Italy, France, Romania, and Poland are among the primary steel producers in the EU, with Germany alone accounting for approximately 25 percent of the total output. However, as Europe grapples with its post-COVID recovery and seeks to reduce its reliance on Russian gas, a renewed dependence on Chinese industrial goods poses a significant concern.
Job security is also a pressing issue, with Ferracci asserting that the French government is backing ArcelorMittal’s decarbonization projects to safeguard employment within the sector. Approximately 300,000 individuals are employed in the EU’s steel industry, alongside another 37,000 in the U.K. The potential loss of steel production could have cascading effects on larger industries such as automotive manufacturing, defense, and renewable energy.
With the urgency of change highlighted by recent global events, a Commission official remarked that the current shift resembles the rapid transformations seen during the pandemic and geopolitical conflicts. The challenge ahead is to implement effective solutions that address the industry’s environmental impact while maintaining its economic viability.
As the steel sector undergoes these transitions, Jankowiak cautioned against overselling the potential demand for steel driven by military applications, emphasizing that sustainable growth should not hinge on conflict-driven needs.