28 August 2025 – A new report by the Scientific Advisory Board of the German Federal Ministry for Economic Affairs and Energy (BMWE) casts a significant shadow over the European Commission’s industrial and trade policy in recent years. Meanwhile, iron ore prices in Asia continue to rise.
Iron Ore Prices in Asia Continue to Rise
On Thursday, iron ore prices on the Singapore Exchange (SGX) rose by 1.6%. Compared with last Friday, this puts them more than 3.5% higher, and 4.4% up from the end of July 2025. This increase is now also becoming visible in steel products.
Industrial Policy in Europe – Expert Report Casts a Dark Shadow over the EC
The latest report from the Scientific Advisory Board of the German Federal Ministry for Economic Affairs and Energy (BMWE) takes a highly critical view of the European Commission’s (EC) industrial and trade policy in recent years.
Under the title “Industrial Policy in Europe“, the report does not only criticise the Commission’s focus on individual industries (such as steel, chemicals and automotive), but also examines the recent US tariff policy and what this ultimately means for Europe. The economists highlight clearly:
“The studies show that tariff increases may have helped domestic producers in the respective sectors, but only at the expense of importing producers and final consumers in the US. The overall effect was negative.”
Source: Industrial Policy in Europe, BMWE, August 2025
A crucial point, they argue, which applies directly to the European Union as well.
EU Trade Defence Measures: A Powerful Tool of Strong Lobby Groups only
As early as June 2025, a European Parliament-commissioned study on anti-dumping and anti-subsidy investigations (TDI) found that such measures had strayed far from their original purpose and had become nothing more than a powerful political tool to shield strong lobby groups from foreign competition.
Negative Impact of TDI on the EU Economy Ignored
According to the study, policymakers often wilfully ignore the negative impact on the domestic economy. Even if trade defence measures ultimately lead only to higher tariffs, higher consumer prices, and reduced market efficiency. The European Central Bank has repeatedly confirmed this – most recently with regard to the CBAM safeguard mechanism:
“CBAM… results in larger economic losses, particularly for energy-intensive sectors that are key input suppliers for other sectors.”
Source: ECB Working Paper Series No 3020
The BMWE report goes on to highlight numerous other weaknesses in the EU’s current industrial policy, noting that the Commission has increasingly sought to expand its influence – even though it lacks full democratic legitimacy to do so.
Key points of the report:
- Subsidising all companies in a sector, as seen in steel, is costly and may even slow down transformation, since not only the most suitable companies are able to adapt.
- Supporting individual companies always carries the risk of disadvantaging their competitors.
- The creation of “European Champions” by blocking market entry and granting selective subsidies should not be an objective of industrial policy.
- The EC’s “strategy summits” with the automotive, steel and chemical industries show that if the concept of strategy remains undefined, every industry or sector could claim strategic status and demand its own protective measures. Were these demands to be met, it would mean the end of the open market economy.
- Protective measures going beyond those provided for under international trade rules (WTO) must be rejected.
- Many of the proposals put forward in the Letta and Draghi reports would, if implemented, massively strengthen the power and influence of the European Commission – especially regarding tax and budgetary interventions. Since the boundaries of industrial policy are blurred, this could result in a multitude of ad hoc interventions, heavily dependent on the Commission’s preferences.
- Unlike national governments, the Commission is not directly elected by EU citizens and can only be held indirectly accountable for its decisions – which is problematic.
Even these few excerpts from “Industrial Policy in Europe” make it clear that EU industrial and trade policy in recent years has been directed almost exclusively at serving the interests of a handful of influential lobby groups.
Commission Should Refocus on the Internal Market
The report therefore strongly recommends that the Commission shift its focus back to the crucial area of the internal EU market and the barriers that still exist there. The International Monetary Fund found in 2024 that the EU had tariff equivalents of 45% in manufacturing and even 110% in the services sector. Although the Commission has already presented an Single Market Action Plan to address this, the findings show that the EU does not need new external trade defence measures – it simply needs to dismantle its own internal barriers.
It is therefore not the so-called “cheap imports” from Asia that EU steelmakers need protection from. Rather, European businesses need protection from the domestic steel lobby itself. With its excessive demands for competition-choking trade defence measures and a non-WTO-compliant successor to the EU Safeguard measure, the domestic steel lobby poses a threat to competition, growth, and innovation.
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