20 May 2026 – On Tuesday, the European Parliament approved the introduction of new steel tariffs and quota reductions. What is being marketed as protection for European industry is, in truth, a hidden tax increase – paid for by Europe’s consumers and SMEs. Aluminum: Hormuz shock could push prices towards USD 4,000.
Steel Tariffs: European Parliament Votes for Higher Costs for EU Citizens
606 to 16 – the European Parliament waved through the new steel tariffs and quota reductions with an overwhelming majority. What is being marketed as protection for European industry is, in truth, a hidden tax increase – paid by Europe’s consumers and SMEs.
Clear Vote, Expensive Consequences
On Tuesday, the European Parliament voted by 606 votes in favour, 16 against, and 39 abstentions to introduce new steel tariffs and lower import quotas on steel. If the Member States also follow the compromise proposal, the measures are set to enter into force on 1 July 2026.
Second Hidden Tax Increase from Brussels – in 2026
For small and medium-sized enterprises that process and use steel, this means significant competitive disadvantages. For all other EU citizens, it means something even more fundamental: the steel tariffs are the second de facto tax increase from Brussels within a single year.
Because, as with CBAM, the higher material and production costs are not borne by foreign manufacturers – they must be passed on to end consumers. That is not a political opinion, but economic consensus: the U.S. Tax Foundation, the Kiel Institute for the World Economy, and now also the German Economic Institute, IW, in a current report from May 2026, all arrive at the same finding: tariffs primarily burden one’s own citizens, not foreign exporters.
The Narrative Carries the Vote – Not the Substance
The parliamentary rapporteur Karin Karlsbro, Renew, Sweden, argued that the measures would combat the negative effects of global overcapacity. An assessment that hardly withstands real economic scrutiny – and for which a fitting comment on tariffs could be found in the IW report: it was “not the first time in international relations that the narrative is more important than the economic substance.”
Remarkable: already during Monday’s parliamentary debate, several Members of Parliament clearly spoke out against the tariffs and explicitly pointed to the disproportionate burden on small and medium-sized enterprises – without any effect on the voting result.
“My thanks go to all those parliamentarians who clearly spoke out against this enormous mistake, or expressed this through active abstention, and thereby tried to prevent the steel tariffs and quotas.”
Thorsten Gerber, CEO Gerber Group
Aluminum: Hormuz Shock Could Push Prices Towards USD 4,000
A geopolitical supply shock, Chinese production capacities at the limit, and unbroken demand in North America – the aluminum market is heading into a heated phase.
Citigroup Warns: Biggest Supply Shock Since 1950
Analysts at Citigroup have classified the Iran conflict and the closure of the Strait of Hormuz as one of the most severe supply shocks for aluminum since 1950. Their forecast: the price could rise to as much as USD 4,000 per tonne within the next three months.
A first taste of this was already visible last week, when the LME cash bid price climbed to USD 3,768 per tonne.
China Produces at the Legal Limit
The production outages in the Middle East are leaving clear marks on the global supply balance. Chinese producers are already running at full throttle and are approaching the state-imposed production cap of 45 million tonnes per year. Further capacity reserves practically do not exist – China cannot compensate for the outage, even if it wanted to.
North America: Demand Defies Tariffs
Demand for aluminum also remains high overall. In North America, above all in the United States, aluminum demand continued to grow in 2025. Since the U.S. is structurally dependent on imports and lacks its own smelting capacity, the effect of import tariffs largely fizzled out: demand remained high, and prices rose along with it.
Supply shock in the Middle East, exhausted capacities in China, robust demand in North America: all three factors are acting simultaneously and in the same direction. For buyers, this means: price pressure is unlikely to ease much in the coming months and is more likely to increase further.
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