1. What changed overnight?

Last week’s Washington-Brussels “mini-deal” left most trade at a modest 15 % tariff, but slapped a hefty 50 % duty on every tonne of EU steel and aluminium—double the rate in force just two months earlier.

2. Why that hurts Europe’s mills

In 2024 European producers shipped roughly 3.8–4 million t of steel and US $2.8 billion of aluminium to the United States, the bloc’s No. 2 export market for both metals. Those tonnes are now stranded.

3. Price backdrop (mid-July 2025)

• EU benchmark: Italian hot-rolled coil (HRC) at €528 /t ex-works (≈ US $581 /t).

• US benchmark: Argus Midwest HRC at US $897.75 per short ton (≈ US $991 /t).

• Freight + port costs: ≈ US $60 /t to cross the Atlantic.

4. Arbitrage math in plain words

• No tariff: Landed EU coil ≈ US $641 /t vs. US spot at US $950–1 000 /t → US $309–359 /t margin for EU exporters.

• 50 % duty (now): Landed cost jumps to ≈ US $1 026 /t → margin flips to -US $26 to –US $76 /t. Trade stops.

• Hypothetical 15 % duty: Landed cost falls to ≈ US $787 /t → margin rebounds to +US $163–213 /t. Trade works again.

5. Immediate fallout

• 70–90 % of EU steel exports are suddenly loss-making; Q4 bookings are already being cancelled.

• Global knock-on: Surplus tonnes chase buyers in Türkiye, the Middle East, and Asia, depressing already soft flat-steel prices there.

6. The 15 % “off-ramp” Washington is dangling

US officials hint the 50 % rate could drop if Brussels accepts a wider quota-plus-climate package. At 15 %, the trans-Atlantic spread would reopen above US $160 /t, big enough to restore—possibly exceed—pre-tariff volumes until quota caps bite. Cheaper imports would meanwhile soften the estimated US $22 billion annual tariff bill facing US auto and construction supply chains.

7. CBAM: Europe’s medium-term equaliser

From 1 January 2026 the EU’s Carbon Border Adjustment Mechanism (CBAM) will charge imported steel and aluminium a levy tied to EU ETS prices. Expect two effects:

1. Price floor: CBAM lifts the minimum price on low-cost Asian or Turkish coil entering Europe, offsetting part of the US-driven demand loss.

2. Green-steel upside: EU mills that accelerate hydrogen-DRI/EAF projects can market “CBAM-proof” coil at home and may gain premium access if Washington links future tariff-rate quotas to carbon intensity.

8. Strategic take-aways

1. At 50 %, the EU-to-US steel arbitrage is dead. Cargo diversion and price erosion will spill into third markets.

2. A 15 % ceiling would flip the spread back in Europe’s favour, but only until CBAM charges and new US capacity narrow the gap again.

3. Short-term winner: US mills enjoy a protected price floor; EU exporters scramble for alternative outlets.

4. Long-term winner: European producers that pivot fastest to verifiable low-CO₂ steel, capturing dual premiums in two carbon-constrained markets.

5. Intelligence edge: In a world where tariff headlines, carbon costs and freight spreads swing margins by triple-digit dollars overnight, real-time analytics matter more than ever. Platforms like MATERIA’s market-intelligence suite track trans-Atlantic arbitrage, live CBAM scenarios and green-premium differentials in one dashboard—helping trading desks, procurement teams and strategy units act before the window slams shut again.