• European Union officials are preparing to warn US Trade Representative Howard Lutnick against broadening steel tariff coverage
  • The warning comes as US steel tariffs hit 50% for most countries, adding an estimated $50 billion in tariff costs
  • EU producers face severe competitive disadvantage with US-EU steel price gap widening 77% since February

European trade officials are preparing a formal warning to US Trade Representative Howard Lutnick against expanding the scope of recently implemented steel tariffs, according to people familiar with the matter. The communication, expected to be delivered this week, aims to prevent further escalation of transatlantic trade tensions that have intensified since President Trump reinstated 25% tariffs on steel imports in March.

The situation deteriorated significantly in June when the administration doubled steel and aluminum tariffs to 50% for all countries except the United Kingdom. Boston Consulting Group estimates these latest measures will add approximately $50 billion in tariff costs, doubling the economic impact of the initial March tariffs.

European producers have been particularly hard hit by the measures. The price difference between US and EU steel has widened dramatically, increasing by 77% between February and May 2025, creating what EU officials describe as an "untenable competitive landscape" for European steelmakers.

An EU trade official, who asked not to be identified because the discussions are private, said the warning to Lutnick will emphasize that further expansion of tariff coverage "would trigger an immediate and proportional response" from the bloc. The official noted that while the EU understands domestic industrial policy concerns, "the current measures already cross the line of reasonable protection."

The US Trade Representative's office did not respond to requests for comment on the impending EU warning. However, administration officials have previously defended the tariffs as necessary to protect domestic steel production and national security interests.

The economic consequences of the escalating trade measures are becoming increasingly apparent. Analysis shows the tariffs are projected to lower real GDP growth by 0.5 percentage points over 2025-2026 and increase unemployment by 0.3 percentage points by the end of this year. By the end of 2026, payroll employment is expected to be 490,000 jobs lower than pre-tariff projections.

Major US trading partners are watching the EU-US developments closely. Canada, Mexico, and South Korea—which together accounted for almost half of US steel imports in 2024—face similar pressures, with the 50% tariffs threatening to undermine existing trade agreements including the US-Mexico-Canada Agreement.

European officials indicated they remain open to negotiated solutions but are prepared to implement countermeasures if the US expands tariff coverage. "The ball will be in the US court," the EU trade official said, noting that Brussels has "multiple options" for response if warnings go unheeded.