On 12 March, the European Commission responded to the imposition of new U.S. tariffs on EU steel and aluminum imports.  The Commission pledged to implement “swift and proportionate countermeasures on U.S. imports into the EU,” signaling a firm stance while leaving the door open for future negotiations.

Announced Countermeasures under the Enforcement Regulation

The EU’s response is made up of two measures:

  1. The reinstatement of 2018 and 2020 EU additional ad valorem duties on certain U.S. imports (“Old Rebalancing Measures”):  In 2018, the first Trump Administration introduced 25% and 10% tariffs on EU steel and aluminum exports, respectively, under Section 232 of the Trade Expansion Act of 1962.  As a response, the EU adopted a list of additional ad valorem duties on certain U.S. imports.  In 2020, the first Trump Administration extended the tariffs to cover certain steel and aluminum derivative products.  The EU then adopted a broader list of additional ad valorem duties on certain U.S. imports.  Adopted under the Enforcement Regulation, these Old Rebalancing Measures were designed to maximize political pressure on the first Trump Administration to rescind its tariffs.  They were suspended in 2023 following an agreement with the Biden Administration.

    As the suspension of the Old Rebalancing Measures expires automatically on 31 March, the Commission will reimpose them.  These Old Rebalancing Measures cover approximately €8 billion worth of EU imports from the U.S., intended to be proportionate to addressing the economic damage inflicted by the U.S. tariffs, and concern products ranging from boats to bourbon to motorbikes.
  2. New EU measures under Article 5 of the Enforcement Regulation (“New Rebalancing Measures”):  In response to the fresh U.S. tariffs impacting another €18 billion of EU exports, the Commission now plans to roll out new or additional ad valorem duties under Article 5 of the Enforcement Regulation (see the suggested product list).  A stakeholder consultation is open for comment from 12–26 March, gathering input from affected industries.  Following this, the Commission will draft an implementing act and consult Member States through the comitology procedure (as provided by the Enforcement Regulation).  The implementing act is scheduled to take effect mid-April, bringing the total value of U.S. exports potentially impacted by the Old and New Rebalancing Measures to €26 billion.

Despite the EU’s robust response, the Commission emphasized its willingness to seek a negotiated resolution, stating that the measures could be lifted at any time if a mutual agreement is reached.  However, in response to the EU countermeasures, specifically a 50% tariff on U.S.-produced whiskey, President Trump has threatened to impose additional 200% tariffs on EU wine and spirits.  Industry executives have expressed concern that the automotive sector could be targeted next.

Potential Use of the Anti-Coercion Instrument Further Down the Line?

There had been some speculation that the EU would use the Anti-Coercion Instrument (ACI) in response to recent actions by the Trump Administration, including the announcement of new tariffs, discussions about acquiring Greenland and challenges to EU technology regulations and Value-Added Tax (VAT) policies.  This is a new framework for the EU to deter and counteract coercive practices that threaten its sovereignty and economic interests.  The ACI was originally proposed in 2021 and entered into force in 2023.  It was devised primarily in response to trade restrictions placed by China on Lithuania following the latter’s acceptance of a Taiwanese Representative Office’s establishment in the country.

Instead, the Commission opted to rely on the Enforcement Regulation, as it had in response to the first Trump administration’s s.232 measures on steel and aluminum.

This is consistent with the ACI framework, which is designed to address exceptional circumstances of economic coercion.  “Economic coercion” is defined as situations where a third country seeks to pressure the EU or its Member States into making specific policy decisions by applying, or threatening to apply, trade measures.  It is not clear what measures, if any, the Trump Administration seeks from the EU in response to its expanded steel and aluminum tariffs.

Should the ACI be engaged by future U.S. trade measures, the range of potential EU “response measures” is broad, as outlined in Annex I to the ACI.  This can be targeted at trade in goods and services, but also extend to much broader restrictions, including on intellectual property rights, banking and insurance services, or participating in public tenders for U.S.-origin companies.  As with the Enforcement Regulation, the Commission needs a qualified majority in the Council to adopt the measures.  The European Parliament has the right to be kept informed, but may not block the measures’ adoption.

Strategic Dialogue on Steel

In parallel to these trade defense measures, the EU has ramped up efforts to support its steel and metals industry.  Responding to persistent calls for greater assistance, the Commission launched a Strategic Dialogue on Steel on 4 March, kicking off with a high-level meeting followed by a series of technical discussions with industry representatives.

Insights from these meetings will feed into the upcoming Steel and Metals Action Plan, which Executive Vice-President for Prosperity and Industrial Strategy, Stéphane Séjourné, is set to present by 19 March.  The plan will outline the EU’s long-term strategy for the sector and is likely to reference a forthcoming Commission proposal, expected in the autumn, to address the 30 June 2026 expiration of the provisional safeguard measures on steel imports currently in force.  These safeguards, adopted in 2018 by the EU and distinct from the Rebalancing Measures, will hit their maximum 8-year duration and automatically expire on 30 June 2026.  The EU intends to maintain an equivalent level of protection to the European steel industry as under the safeguards through new tariff rate quotas, but the precise form of this proposal is not yet public and may be impactful for steelers globally.

Key Takeaways for Businesses

For companies on both sides of the Atlantic, these developments carry significant implications:

  • EU-based companies should actively participate in the stakeholder consultation process open until 26 March to help shape the New Rebalancing Measures.
  • With the 2026 provisional safeguards on steel expiration date already in view, businesses should monitor upcoming Commission proposals and plan for the post-safeguard landscape.
  • As the U.S. Administration imposes further tariffs, all businesses will need to watch closely and engage on the EU’s response, which could be significantly broader than these steel-related Old and New Rebalancing Measures.

***

Our cross-practice EU trade policy and trade control team has been closely monitoring the evolution of these US tariffs and the EU’s potential responses.  We can guide businesses through the complexities of this shifting landscape, helping them assess and mitigate the risks these measures pose to their operations and future projects.

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