Brussels: The European Automobile Manufacturers' Association (ACEA) has raised concerns regarding the European Union's recent decision to amend steel import quotas and increase tariffs, stating that these changes could lead to inflationary repercussions throughout 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 conveyed in a statement.

According to Anadolu Agency, the association highlighted that the significant reduction in import quotas and the doubling of out-of-quota tariffs to 50% will severely limit the ability to alleviate market pressure through imports. Furthermore, the introduction of a new 'melt and pour' rule of origin is anticipated to further restrict imports, imposing a significant administrative burden on European users of imported steel products.

The ACEA urged the EU Commission to consider the unique circumstances of sectors reliant on specific steel imports, particularly the automotive industry. The association pointed out that quotas for automotive-grade steel have been swiftly exhausted during the seven years of the previous safeguard measures. Additionally, they cautioned that the application of the 'melt and pour' rule of origin could be intricate given the complex and global nature of automotive supply chains.

The European Commission announced its intention on Tuesday to bolster the EU's steel industry by increasing tariffs and significantly cutting import quotas. This plan aims to establish 'strong and permanent protection' for the steel sector. Tariffs on surplus imports are set to rise to 50%, while tariff-free import quotas will be reduced by 47% to 18.3 million tons annually, starting from 2024.

The EU Commission explained that this plan is designed to replace the existing steel safeguard measure, which is due to expire by June 2026. It seeks to address demands from EU workers, industry stakeholders, and various political representatives for robust and lasting protection of the EU steel industry, with an emphasis on preserving jobs and supporting the sector's decarbonization efforts.