Diplomacy or retaliation? Tariff crossroads for Germany over steel

The Benteler Steel tube plant in Lingen, north west Germany produces raw pieces of steel from scrap metal. They produce around 650,000 tonnes of steel per year, which means over 2,000 tonnes per day.

From Lingen, the steel is shipped by train to other Benteler mills in the region where they are manufactured into cold-drawn tubes for all sorts of industries across Europe, including automotive, energy and construction. Some are also sent to the company's plant in the U.S. state of Louisiana.

Things are about to change and there is huge concern for an already concerned industry in Germany.

"Tariffs will of course affect the products that we supply from Europe - that is the steel we supply from Lingen to the United States," says Thomas Michels, COO of Benteler Steel.

Supply chains

The tariffs ordered by U.S. President Donald Trump of up to 25 percent on EU steel and aluminum have now come into effect. These levies affect over $8.5 billion worth of EU exports.

According to the EU industry association, around four million tonnes of EU steel were exported to the U.S. in 2023 with a quarter of that coming from Germany.

Michels added: "Many suppliers who currently supply the U.S. from Asia and China, will look for new markets and will try to supply more products to Europe. 

"I think we should enter into talks with the U.S. to find a good solution for the EU, Germany and the U.S.. The EU must take action and set up certain border zones to prevent dumping steel from coming into the EU."

Hitting back

The European Commission has announced counter tariffs on $28 billion worth of U.S. goods from next month, to "protect European businesses, workers and consumers from the impact of these unjustified trade restrictions."

However, the commission has also said that it remains open to negotiations, a position backed by many German steelmakers who say the tariffs don't make sense even for American industry.

"If you consider that the U.S. imports up to 21 million tonnes of steel, it won't be possible to produce these 21 million tons in the U.S. because the capacity simply doesn't exist," Michels said.

It is predicted by some that instead of protecting the U.S. steel industry, these tariffs will simply drive up costs for U.S. customers.

Outgoing German Chancellor Olaf Scholz condemned the move by the U.S. He said: "I think the decisions on tariffs by the U.S. are wrong and we will react to them appropriately and quickly."

They are a crippling blow for the German steel industry with these additional costs from tariffs set to add more pressure on already struggling with higher energy prices and decarbonization costs.

Scholz said his government was maintaining "close contact with the European Commission and other EU member states" about responses. Time will tell to see if these responses include positive diplomacy with the Trump administration.