(MENAFN) The European Automobile Manufacturers' Association (ACEA) warned Wednesday that the European Union’s latest strategy to curb steel imports by slashing quotas and doubling tariffs will fuel inflation across Europe.

“Automobile manufacturers source approximately 90% of their direct steel purchases in the EU and are most concerned about the inflationary impact that an effective continuation of the safeguard will have on European market prices,” ACEA said in an official statement.

The association highlighted the severe impact of key changes, particularly the “dramatic” reduction of import quotas and the increase of the out-of-quota tariff to 50%, which will drastically limit imports as a pressure valve on European steel prices.

“In addition, a new rule of origin based on the ‘melt and pour’ principle will restrict imports further and create a massive administrative burden for European users of imported steel products,” the statement added.

ACEA stressed that the European Commission must recognize the unique challenges faced by sectors like automotive that rely on importing specific grades and quantities of steel.

“Quotas for automotive grades have always been rapidly exhausted under the last seven years of the safeguard. The Commission also needs to understand the complexity of applying the ‘melt and pour’ rule of origin in deep and global supply chain such as automotive,” the group said.

This announcement follows the European Commission’s Tuesday declaration to impose a 50% tariff on steel imports exceeding new, sharply reduced quotas, which are set at 18.3 million tons annually—a 47% cut compared to 2024 limits. This measure aims to replace the existing steel safeguard, scheduled to expire by June 2026.

According to the commission, the plan “responds to the call from EU workers, industry, several Member States, Members of the European Parliament, and stakeholders to offer strong and permanent protection to the EU steel industry, with a view to safeguarding EU jobs, and supporting the sector in its decarbonization efforts.”

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