The cost of protection: global reactions to the EU’s new steel TRQs

On July 1, 2026, the European Union introduced a new steel import regime under Regulation (EU) 2026/1384 and its implementing regulation that sharply reduced duty-free steel import quotas to about 18.3 million tonnes per year and raised the duty on volumes above quota to 50%. The quota allocation was based mainly on 2022-2024 import patterns, with country-specific quotas generally granted when a country held at least 5% of EU imports in a product category.

From the EU’s perspective, the new tariff-rate quotas, or TRQs, are meant to protect the European steel market from global overcapacity, import surges, and trade diversion. The bloc argues that the global steel market is distorted by excess capacity, subsidized production, and low-priced imports, particularly from countries such as China and other Asian suppliers.

However, the reactions from trading partners are mixed. Some countries see the measure as discriminatory and economically damaging. Others secured relatively favorable allocations and preserved good access to the EU market. Let’s see which countries are the most damaged and what they are going to do.

Turkiye

Turkiye is among the countries most exposed to the new EU quotas. Ugur Dalbeler, chairman of the Turkish Steel Exporters’ Association, warned that reduced European quotas could cut Turkish steel exports to the EU by about 3.5 million tonnes and cost Turkish steelmakers roughly $3 billion in annual export revenue.

According to the Turkish Steel Exporters’ Association, Turkiye exported 7.9 million tonnes of steel products to the EU in 2025, including products outside the TRQ framework. As a result, the new quotas could reduce Turkish steel exports to the EU by around 56% annually.

The pressure from new TRQs appeared immediately: on July 1, Turkey’s quarterly quota for Category 1A (hot-rolled coil) was oversubscribed on the first day. The quarterly allocation was 160,574 tonnes, while importers filed requests for 229,564 tonnes, exceeding the limit by 43%.

According to GMK Center calculations, the most damaged product is hot-rolled sheets belonging to 1A category: annually Turkiye loses about 1.2 million tonnes of exports. Also, significant losses are reported for rebars (369 thousand tonnes compared to 2025) and wire rods (263 thousand tonnes).

Turkish industry’s main response is to seek alternative markets outside Europe. At the same time, Dalbeler called on the Turkish government to adopt trade defense measures at home, arguing that Turkey’s steel sector is already under pressure from rising imports (+13.9% year-on-year in 2025). Capacity utilization of Turkish plants reached about 55% meaning that achieving profitability in 2026 and 2027 will be highly challenging.

Brazil

The Ministry of Foreign Affairs and the Ministry of Industry, Trade and Services criticized the EU’s unilateral restrictions on steel imports from Mercosur countries. The quotas were introduced shortly after the EU and Mercosur signed their free trade agreement on Jan. 17 this year.

Brazilian officials argued that the EU acted without proper negotiation with Mercosur members and without reaching compensation under Article XXVIII of the GATT. According to their opinion, new quotas restrict access to the European market without solving the global overcapacity problem.

The EU allocated Brazil an annual quota of about 227,000 tonnes for finished steel products. In 2025, Brazil exported to the EU 293 thousand tonnes of finished steel products, including flat- and long-rolled products, pipes.

According to GMK Center’s estimates, the biggest potential losses are in segment of cold-rolled sheets (proposed quota is 81% less than actual 2025 imports), but Brazil will be able to increase exports of hot-rolled sheets by 121% (93 thousand tonnes).

Brazil’s core message is that countries not responsible for global overproduction should not be punished. The government warned that such restrictions could trigger an escalation of retaliatory trade defense measures. The Brazilian Steel Institute also said negotiations were still ongoing because the EU proposal was “unsatisfactory” and needed adjustments by product category.

Malaysia

The Malaysian Iron and Steel Industry Federation, or MISIF, said that it respects the EU’s right to implement safeguard measures in accordance with WTO rules, but Malaysian producers should not suffer from measures designed to address global overcapacity. MISIF emphasized that Malaysia has exported responsibly and moderately and has not caused the import surges targeted by the EU.

Malaysia is disadvantaged because it has no free trade agreement with the EU. Under the new system, Malaysia received an individual quota in only one of 26 product categories: non-alloy and other alloy wire rod (the proposed quota is 25 thousand tonnes, or 40% bigger than 2025 imports). In other categories, Malaysian exporters must compete in general quota pools, and any above-quota shipments face the new 50% duty. In 2025, the EU imported from Malaysia 524 thousand tonnes of finished steel products, including long- and flat-rolled products and pipes.

MISIF also criticized the EU’s use of 2022-2024 data. Malaysian exporters were still recovering from the pandemic or entering new markets during that period, so the baseline does not reflect the sector’s true potential. “Malaysia asks only that its steel be given fair and equitable access to the markets of its trading partners,» said Mr Roshan M Abdullah, President of MISIF.

Japan

Japan’s steel industry associations described the EU quotas as “inappropriate and regrettable,” especially because Japan and the EU are free trade agreement partners. Five associations supported this statement: the Japan Iron and Steel Federation, Special Steel Association of Japan, Japan Stainless Steel Association, Japan Wire Products Association, and Non-Integrated Steel Producers’ Association.

Japan’s annual quota was set at about 800,000 tonnes, compared with average annual EU imports from Japan of about 1.5 million metric tons in 2022-2024. In hot-rolled coil, Japan’s quota is about 551,000 tonnes, while those products also remain subject to 30% anti-dumping duties inside the EU.

«Unfair trade measures taken by the EU have been creating a serious situation that hinders the smooth export of steel products by Japanese companies to the European market and threatening our capacity and contribution to serve customers in the European market,» the Japanese steel associations said in joint statement.

UK

The United Kingdom responded differently from most countries: it introduced its own parallel steel trade defense measure on July 1, 2026. The UK reduced overall tariff-free quota volumes by 51% from the previous safeguard level, limiting total permitted imports to about 3.2 million tonnes and applying a 50% tariff above quota.

The UK’s stated concern is trade diversion. If steel excluded from the EU market is redirected to the UK, British producers could face a surge of low-priced imports. London also negotiated a quota arrangement with the EU to preserve stability in UK-EU steel trade.

In the EU’s TRQ system, UK got bigger quotas (compared to 2025 imports) for supplies of cold-rolled sheets and metallic coated sheets (4B), while quotas for metallic coated sheets (4A) and wire rod are significantly lower.

India

EEPC India (the Engineering Export Promotion Council of India) estimated that Indian iron and steel exports to the EU could fall by about 40%, equal to an annual export loss of roughly $1.36 billion.

Industry leaders described the allocation as a “mixed bag.” India secured better access in some categories, including stainless bars and light sections, stainless wire rod, and seamless tubes, but many other categories either received no additional quota or saw reductions in line with the broader EU cut.

GMK Center’s calculations show that under new TRQs India will be able to increase supplies of hot-rolled sheets and metallic coated sheets 4A to the EU, while export of cold-rolled sheets, metallic coated sheets 4B, organic coated sheets and quarto plates will be seriously hit.

South Korea

South Korea’s reaction was comparatively positive. The Korea Iron and Steel Association welcomed the country’s allocation, which followed negotiations under the South Korea-EU free trade agreement.

South Korea received a dedicated quota of about 2.073 million tonnes. That is a 19.7% reduction from the previous safeguard level, but it is much less severe than the roughly 46% overall cut in EU duty-free steel imports. The industry said the new allocation would allow Korean companies to maintain existing business relationships and secure a more predictable export base.

The Korean government believes steel volumes originally intended for Europe may be redirected to other markets, increasing competition globally. To offset the impact, South Korea plans to stimulate domestic steel demand through cooperation with shipbuilding, defense, and renewable energy sectors. The government expects these measures to generate more than 510,000 tonnes of additional steel demand.

Taiwan

Taiwan received an annual national quota of about 670,000 tonnes, roughly 190,000 tonnes higher than its quota under the final phase of the previous EU safeguard regime. The increase is caused by a broader product coverage: Taiwan retained five quotas in categories already covered by the previous system (electrical sheets, organic coated sheets, stainless cold-rolled sheets, stainless wire rod, and welded steel pipes), while four additional categories were added: hot-rolled coil, cold-rolled coil, coated steel sheets, and stainless hot-rolled sheets.

In 2025, the EU imported from Taiwan almost 2 million tonnes of steel including long- and flat-rolled products and pipes. Quota in key categories of Taiwan’s exports are set lower than imports in 2025.

Taiwan criticized the EU’s approach to quota defining. Its government argues that after eight years of EU safeguard measures, the bloc should move back toward freer trade rather than create another protectionist barrier. Taiwan also objects to more favorable treatment for FTA countries and says the EU did not consult sufficiently or accept Taiwan’s view of a reasonable quota.

Taiwan plans to reserve its WTO rights and has asked the EU to prioritize consultations with Taiwan if quotas are adjusted later. Domestically, the Ministry of Economic Affairs will work with the steel association to create an export quota management mechanism to help companies export to the EU.

Ukraine

Ukraine is one of the hardest-hit countries: Ukraine’s country-specific quotas were reduced to about 1.05 million metric tons, while its finished steel exports to the EU reached about 2.63 million metric tons in 2025. That means the new TRQs are about 60% below Ukraine’s 2025 finished steel export volume, worse than the overall EU quota reduction of about 46%.

Estimated losses are severe: Ukraine could lose 1.3-1.5 million tonnes of exports and production per year, with up to $1 billion in export revenue at risk. The quota shock could force the shutdown of two blast furnaces. About 37% of Ukraine’s flat-rolled output and 25% of long product output are at risk.

In fact, the allocation gives Ukraine no meaningful preferential treatment, despite its EU candidate status and wartime conditions. The baseline period of 2022-2024 is especially controversial because those were the most disrupted years for Ukrainian steel after Russia’s full-scale invasion. Logistics problems, electricity shortages, the blockade of Black Sea routes depressed Ukrainian export volumes.

«Given that Ukraine does not pose a significant threat to the EU steel industry, further negotiations with the European Union aimed at preserving the historical conditions of access for Ukrainian steel products to the EU market remain one of the Ukrainian government’s priorities,» Ukraine’s Economy Ministry press service told in the comment to Kyiv Independent.

Conclusions

The EU’s new TRQs have created a split among steel-exporting countries. South Korea emerged as a relative winner because its FTA-based allocation softened the impact. UK introduced own TRQ system. Other countries (Turkey, India, Japan, Malaysia, Brazil, Taiwan, Ukraine) see the regime as damaging, unfair, or discriminatory.

The common criticism is that the EU is using a broad import restriction to address a complex problem. Exporting countries acknowledge that global overcapacity is real but argue that it cannot be solved by disrupting established supply chains. The long-term test of the new TRQs, therefore, will be not only whether they improve conditions for EU steelmakers, but also whether this protection comes at the cost of higher prices for European consumers, weaker industrial competitiveness, and strained relations with key partners.