The German steel industry faces an “existence-threatening crisis” according to Chancellor Friedrich Merz, prompting a “Steel Summit” at the Chancellery aimed at addressing the sector’s deepening woes. Following the dialogue involving federal and state representatives alongside industry leaders, Merz pledged the government’s commitment to advocating for improved competitive conditions, signaling a potential shift in Germany’s long-held free market stances.
The crisis, largely attributed to global overcapacity and the threat of trade diversions, has highlighted the vulnerability of Germany’s steel sector. Participants agreed on the urgent need for a more robust and consistently applied system of external trade protection. This includes urging the European Union to fully leverage its trade policy instruments and secure a strong, balanced and WTO-compliant successor framework for the safeguards currently due to expire in 2026. Critics will likely scrutinize the EU’s ability to deliver on these demands, given existing political and economic complexities.
Beyond trade, the high cost of energy represents a critical impediment to the industry’s survival. Chancellor Merz acknowledged the imperative to lower energy prices in Germany, specifically targeting the steel sector’s needs and referenced ongoing negotiations in Brussels regarding an “industrial electricity price”. The viability of this proposed price structure and its potential impact on other industries, remains a key concern.
Finally, the summit revealed a desire within the steel industry for prioritized procurement of European and German steel in public and private sector contracts. This represents a notable departure from Germany’s previous commitment to unrestricted free markets and “fair competition”. While Merz expressed agreement with this direction, citing the imposition of tariffs in nations like the United States, the move raises questions about potential distortion of market forces and potential retaliatory measures. The Chancellor’s comments underscore a growing sentiment within Germany to prioritize domestic industry protection, a strategy that could reignite debates about economic sovereignty and the long-term implications for global trade relations.
