The European Union is planning to boost tariffs on steel imports in an effort to help local producers cope with the impact of Asian overcapacity as well as new trade barriers imposed by the U.S.

The European Commission, the EU’s executive arm, will propose early next week a long-term mechanism that will also reduce the bloc’s existing quotas for foreign steel by almost a half, the EU’s industry chief, Stephane Sejourne, told a closed-door event on October 1, according to a person familiar with his speech. 

Steel imports beyond those quotas will be subject to the new tariff rate, which will mirror the policy of other jurisdictions such as the U.S., which imposes a 50% duty on imported steel.

Shares of European steelmakers increased on the news. ArcelorMittal SA rose on October 1 as much as 4.4%, Voestalpine AG as much as 4.7% to its highest in more than two years, Outokumpu Oyj as much as 5%, and SSAB AB as much as 8.7%.

The EU currently has a temporary mechanism in place to safeguard the bloc’s steel industry, which imposes a 25% tariff on most imports once quotas are exhausted. That mechanism expires next year, and the commission has been working to replace it with a more permanent instrument, which it plans to unveil next week. 

The effort to protect domestic steel producers coincides with discussions EU leaders are having in Copenhagen on October 1 on how to boost the bloc’s defense capabilities. 

“Our reality today and tomorrow is security, and security means armaments, and armaments means steel,” Polish Prime Minister Donald Tusk told reporters in the Danish capital. “We have to protect our companies, our steel companies in Europe and in Poland.”

The bloc’s steel industry has faced a severe crisis in recent years as it grapples with cheap imports from China and other Asian economies. Furthermore, U.S. President Donald Trump increased tariffs on steel and aluminum imports to 50% shortly after taking office.  

Sejourne said that while the EU continues to believe in an international order where trade is possible, “we will not be the only ones to impose on ourselves the principles that others no longer apply,” according to person familiar with his remarks. 

Reuters reported earlier on the new commission proposal. 

The proposal comes as the EU debates a stricter climate target for 2040, a move that risks putting more pressure on energy-intensive industries such as the steel sector. 

Europe’s steel association, Eurofer, has been demanding tighter measures to reflect new market dynamics and requested a comprehensive post-safeguard trade regime after 2026 to address the destructive spillover effects of global steel excess capacity on the EU market.

“This is the first real measure to support our sector, and support quality jobs in Europe,” said Axel Eggert, Eurofer director general. “But there needs to be more.”