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| Carmakers’ Steel |
25% levy adds pressure on EU auto sector and steelmakers amid weak EV sales and export losses
European steel suppliers are bracing for a decline in steel demand from carmakers following the United States’ 25% import tariffs on steel and automotive products, imposed on March 26, 2025. Although a 90-day pause on a broader 25% reciprocal tariff offered some reprieve on other EU goods, the steel and automotive sectors remain exposed.
The EU automotive sector—responsible for roughly 17% of the bloc’s steel consumption—was already under pressure due to muted electric vehicle (EV) demand and financial difficulties, which delayed annual steel purchasing negotiations. Buyers pushed for price reductions of up to €100 per tonne, with contract discussions dragging from late 2024 into Q1 2025.
Now, new US tariffs are amplifying uncertainty, with fears of further demand erosion and downward pressure on steel prices.
In April’s edition of MEPS International's European Steel Review, it was noted that while Germany’s automotive demand remained stable year-on-year in Q1 2025, overall prospects are shaky. Eurofer forecasts a 2.1% increase in EU car production in 2025, a modest rebound after a 6.2% decline in 2024, which brought output down to 14.8 million units.
US Tariffs Undermine EU Exports and Future Steel Strategies
The US is a key export market for European carmakers, accounting for 22% of the EU’s automotive exports in 2024—760,000 vehicles valued at €38.9 billion. Two-thirds of those exports originated from Germany. According to Oxford Economics, German and Italian exports could fall by 7.1% and 6.6%, respectively. French and Spanish exports, with less exposure, are expected to drop by only 2.3% and 2.4%.
Audi is especially vulnerable, as it lacks US-based production and exported 196,576 vehicles to the US in 2024, down 14% from 2023. In the UK, Jaguar Land Rover halted shipments to the US in April amid uncertainty over tariff impacts. The brand had shipped 38,000 cars to the US in Q3 2024.
Some European steel suppliers worry that carmakers may shift production to the US to avoid tariffs. Yet uncertainty over the long-term status of US trade policy complicates strategic planning. At the same time, green steel ambitions under the EU Clean Deal identify the automotive sector as a key early adopter, but some mills have already scaled back exposure due to weak demand and intense price negotiations in 2024.
Further compounding the challenge, automotive-grade galvanized steel imports from China and Turkey exceeded EU safeguard quotas by 17% and 18%, respectively, triggering over-quota tariffs in early April.
The outlook for EU steelmakers is clouded by these developments. Following a difficult 2024, the sector now depends on stronger demand from construction, machinery, and energy industries to mitigate risks posed by weakening automotive steel consumption. US tariffs remain a major hurdle to sustaining recent steel price gains reported in MEPS’ April review.
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