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Following the announcement by US President Donald Trump to double steel and aluminium tariffs, the European Commission signaled readiness to retaliate. Germany, a major exporter, is experiencing challenges in its steel sector due to global oversupply, high energy prices, and ongoing economic changes.
After US President Donald Trump announced last week that steel and aluminium tariffs would be doubled from 25% to 50%, the European Commission responded by stating it was prepared to impose retaliatory measures. Germany, recognized as one of the world's largest export economies in sectors such as cars, machinery, electrical goods, and chemical products, could face repercussions if increased supply leads to price declines, particularly impacting its steel sector.
The steel industry in Germany has faced ongoing difficulties due to factors including cheap imports from China, high energy costs, and the transition to climate-friendly hydrogen. The number of employees in the sector has dropped from approximately 175,000 in 1990 to just over 78,000 today. According to Tobias Aldenhoff, head of economic and trade policy at the German Steel Association, the industry is "under massive pressure." Crude steel production in Germany has declined by 12% so far this year.
German arms manufacturer Rheinmetall’s share price has increased since the start of the year, following the new government led by centre-right Christian Democrat (CDU) Friedrich Merz pledging billions of euros for defense spending. The car industry is also focusing on increased production in response to geopolitical tensions, which could boost steel demand. A Rheinmetall spokesperson reported that "Rheinmetall's demand for armoured steel amounts to several thousand tonnes per year, with demand doubling in the past two years alone."
Due to the halt in armoured steel production by Thyssenkrupp, Rheinmetall previously relied mainly on foreign suppliers, particularly Sweden, but has recently started sourcing from domestic German manufacturers.
Thomas Erndl, German defence policy spokesperson and member of parliament, stated that the steel industry is "currently suffering from high energy prices, like much of the economy." He noted that government actions include reducing electricity tax to the European minimum, slashing grid fees, and cutting surcharges; however, subsidies are not currently planned. The new coalition agreement outlines these energy cost reductions.
The European Commission launched a Steel and Metals Action Plan in March to address unfair trade practices and review import limits established during the last Trump administration, which are set to expire in June 2026. The German Steel Association called for the EU to employ "effective means of defending itself against the consequences of price dumping or the steadily increasing international overcapacities, especially in China." Aldenhoff stated there is "an urgent need for a new effective instrument that protects the EU market from being overwhelmed by mass imports. In addition, the existing anti-dumping and anti-subsidy instruments need to be revised."
German industrial company Thyssenkrupp is reportedly preparing to sell an additional 30% stake in its steel division to Czech billionaire Daniel Křetínský, who already holds a 20% stake. The company is being broken up and sold in parts, with plans to cut 11,000 jobs. Thyssenkrupp Steel reported a €23 million loss for the first half of the year. Despite the possible sale, Thyssenkrupp is expected to retain 50% ownership of its steel division.
Analysts state that a government bailout of Thyssenkrupp is unlikely. The steel industry's challenges are attributed to global oversupply, particularly from Asia, poor overseas investments, and rising energy prices. Steel remains a global commodity, with Germany already cooperating with the Czech Republic in the automotive sector. While the sale of Thyssenkrupp’s steel division is considered a significant loss for the German economy, it is not expected to affect the defense sector.
