Merz Backs EU Tariff Plan to Help Europe’s Ailing Steelmakers

qpafedvfg]su7(zf1oexn526_media_dl_1.png Bloomberg research

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(Bloomberg) — German Chancellor Friedrich Merz threw his support behind proposed European Union tariffs to shield the continent’s ailing steelmakers and reiterated his government’s commitment to securing steel production and jobs in Europe’s biggest economy.

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After talks Thursday with industry executives and labor officials in Berlin, the conservative leader’s ruling coalition also called for an immediate halt to steel imports from Russia as part of EU sanctions against Moscow and reiterated support for the European Commission’s efforts for “rapid relief” from US tariffs on steel and aluminum.

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That should allow European products to be exported to America “duty-free as far as possible via an appropriate tariff quota,” according to an emailed statement.

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“Our aim is not simply to preserve the steel industry, but also to support it in positioning itself successfully for the future,” Merz said, flanked by Finance Minister Lars Klingbeil.

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“Only with competitive companies will we be able to secure productivity and jobs in the steel industry in the long term,” he added. “We need a little bit more patriotism, a little bit more ‘Buy European here’,” Klingbeil said.

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The European Commission last month proposed 50% tariffs — twice the current rate — on all steel imports above a quota that will be cut by roughly 45%.

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The move by the EU’s executive arm is a response to mounting fears that traditional European industries are no longer able to compete on global terms, choked by a glut of subsidized Chinese products, high energy prices and dwindling local demand.

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EU member states and the European Parliament must still approve the proposal. German backing represents a reversal of its traditional aversion to trade barriers and reflects the new global reality under protectionist US President Donald Trump.

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Once a pillar of the nation’s postwar industrial might, Germany’s steel industry has been in long-term decline as high labor and energy costs render domestic production increasingly uncompetitive.

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A push to decarbonize has added further strain, with costly investments in “green steel” undermined by limited access to cheap renewable power, a contrast to regions like Scandinavia or the Middle East where wind and solar are abundant.

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Merz said his government will intensify efforts to cut energy costs and will give domestic green steel producers preferential treatment on procurement contracts.

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Meanwhile, Asian mills continue to churn out excess steel, keeping global prices low and eroding margins for European producers.

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Thyssenkrupp AG, Germany’s largest steelmaker which was represented at Thursday’s Berlin meeting, has been trying for years to shed its steel division, a business that rarely earns its cost of capital over a full cycle.

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Russia’s war on Ukraine sent energy prices soaring, further battering the sector, while structural shifts such as the steady decline of German carmaking — once a major steel buyer — have curbed demand.