New EU tariffs on steel and Chinese export controls on rare earths

In this Tariff and Trade Alert, we provide an overview of these recently announced measures and how it may affect trade and business operations across borders.   

EU proposal for measures protecting the steel industry

Key elements of the proposed measures

On October 7, 2025, the EU Commission proposed a plan to protect the EU steel industry from unfair impacts of global overcapacity. The proposal follows the EU Steel and Metal Action Plan established in March 2025, with the aim of securing a competitive and decarbonised European steel and metals industry.

In brief, the proposal from the EU Commission includes three key measures:

• Capping tariff-free import volumes at 18.3 million tonnes per year, representing a 47% reduction from the 2024 steel quotas.
• Raising the out-of-quota duty to 50%, up from the current 25%.
• Enhancing steel market traceability through a "melt and pour" requirement to prevent circumvention, requiring importers to document the country in which the steel was initially produced in liquid form and cast into its first solid state.

The new measures will replace the current steel safeguard measures that are set to expire on June 30, 2026. Thus, the new measures are expected to enter into force from July 1, 2026, as long as the proposal is adopted by the European Parliament and the Council following the ordinary legislative procedure. 

Norway exempted 

Products originating in Norway, Iceland and Liechtenstein are explicitly exempted from the proposed measures pursuant to Article 1bis of the proposed regulation. Pursuant to the proposed regulation's preamble, this exception is based on "the close and unique integration under the Agreement of the European Economic Area". It remains to be seen whether similar exceptions will be made under other protective measures that the EU may decide to introduce to protect its internal market. The United Kingdom and Switzerland are not granted similar exceptions. 

Ferroalloy restrictions and CBAM

The proposed steel measures come in addition to possible measures targeting ferroalloys - a key input in steel production – which the EU Commission has signalled. As discussed in one of our previous Tariff and Trade Alerts, such measures leave the EU in a challenging position between WTO rules and the EEA Agreement, and may potentially be incompatible with one or the other, depending on how the safeguard measures are designed. The EU Commission has announced that a final decision regarding ferroalloys will be made on November 18, 2025. 

It should also be noted that the proposed measures protecting the EU steel industry do not affect the implementation of the EU's Carbon Border Adjustment Mechanism (CBAM), which also applies to steel products and which the Norwegian government has announced that will be implemented into Norwegian law by 2027. 

New Chinese export controls on rare earths 

Further, on October 9, 2025, China’s Ministry of Commerce (MOFCOM) announced a comprehensive export control regime covering rare earth elements and associated technologies. While officially presented as a measure to safeguard national security and improve regulatory oversight, many observers interpret it as a strategic response to the implementation of U.S. Section 301 tariffs and port fees measures on Chinese ships, taking effect on October 14, 2025. As the world’s dominant supplier and now the principal regulator of critical materials, China has taken a decisive step to consolidate control over every stage of the rare earth value chain.

Key components of the new framework:

• Expanded Element Control List: By adding five new rare earth elements to its restrictions, Beijing now holds direct regulatory control over the majority of globally significant inputs.
• Extended Jurisdiction (FDPR-Like Mechanism): Beijing’s jurisdiction extends to foreign companies whose products use Chinese-origin rare earth materials or technologies. Although the term “Foreign Direct Product Rule (FDPR)” is not used in MOFCOM’s text, the approach is functionally similar.
• Technology and Know-How Control: Export licensing will cover technical data, designs, blueprints, and manufacturing methods related to rare earth mining, separation, magnet production, and recycling.
• Equipment and Materials Controls: Widened existing restrictions on materials used in lithium batteries. Directly target electrical vehicles, energy storage, and advanced manufacturing. Broaden the scope of control beyond rare earths.
• Case-by-Case licensing system: MOFCOM will approve exports on a case-by-case basis, rather than imposing outright bans. China has stated that eligible civil or non-sensitive applications may obtain general or expedited licenses.
• Compliance notice regime: Exporters must disclose detailed information on the origin, composition, and end-use of all controlled materials. 

These measures will directly affect exporters and downstream users in defence, technology, semiconductor, renewable energy, automotive, and advanced manufacturing sectors across the United States, Europe, Japan, South Korea, and other allied economies. 

Companies dependent on Chinese-origin rare earths are likely to face increased costs, operational delays, supply instability and regulatory uncertainty as they adapt to the new controls. With Western refining and magnet plants still years away, shortages will raise prices for EVs, electronics, and clean energy technologies, while slowing the pace of the global energy transition and digital innovation.

As a direct response to China’s new export controls on rare earth minerals, President Donald Trump announced on October 10, 2025, an escalation in U.S. trade measures, imposing a 100% tariff on all Chinese goods effective November 1, 2025.