New Publication: Global Implications of the EU’s Steel Strategy beyond CBAM

Title: The Bigger Picture: Global implications of the EU’s steel strategy beyond CBAM

Authors: Colette van der Ven, Cláudia Azevedo

Date: 29 January 2026

In response to growing domestic and international pressures on the European Union (EU) steel sector, the European Commission has made the steel industry a priority for the current legislative cycle, culminating in the adoption of the Steel and Metals Action Plan (SMAP). The SMAP introduces a range of regulatory measures designed to enhance competitiveness while advancing decarbonization. While some measures like the EU Carbon Border Adjustment Mechanism (CBAM) have received significant attention, other elements of the strategy, such as emerging labelling schemes, circularity requirements, and trade defense measures – as well as the cumulative impact of these measures – remain relatively under-explored, despite their international implications.

This policy paper provides a cross-cutting analysis of the EU’s new steel strategy, focusing on four pillars with the most significant international implications: (i) preventing carbon leakage, with a focus on CBAM; (ii) creating lead markets through the development of a low-carbon steel label; (iii) promoting circularity, examining the Eco-design for Sustainable Products Regulation (ESPR) and scrap restrictions; and (iv) supporting and protecting the domestic steel sector, including the recently proposed steel safeguard. For each pillar, the paper unpacks the relevant regulatory measures, their key features, and potential impacts on trading partners. It then examines the interlinkages across these measures, assessing scope overlaps, compliance requirements, and areas of misalignment in terms of their objectives.

Finally, this paper highlights how the cumulative impact of the various steel measures could render EU market access semi-closed for some producers, potentially undermining CBAM’s role as a lever to incentivize decarbonization in trading partners. It concludes by proposing cross-cutting policy options for early, steel-focused partner engagement as the EU rolls out these measures, calling for an EU approach that combines sectoral cooperation to tackle the cumulative impacts of EU steel-related measures, bilateral engagement with key steel exporters to the EU, and targeted support measures. 

This policy paper is published as part of Tulip Consulting’s collaboration with the Brussels-based think tank Europe Jacques Delors (EJD). It builds on findings from a separate TULIP research project on the role of trade in decarbonizing the Indian steel sector.