According to Financial Times News, German Chancellor Friedrich Merz has dramatically reversed his position on free trade by backing protectionist measures against Chinese steel imports. After meeting with steel sector representatives on Thursday, Merz endorsed EU Commission proposals to increase tariffs and reduce duty-free quotas, calling them “in the right direction.” He also supported taxing imports from countries with weaker CO₂ standards and pushing incentives for EU-produced steel. The chancellor acknowledged this stance represents a complete departure from Germany’s traditional free trade position, citing changed global conditions where “markets were open” and “competition was fairer” in earlier times. The shift comes as German steelmakers face massive pressure, with Thyssenkrupp alone planning to cut 11,000 jobs in Duisburg—40% of its workforce there—amid 18,000 EU-wide steel job losses announced in 2024.
Sponsored content — provided for informational and promotional purposes.
Economic reality bites
Here’s the thing about principles—they tend to get flexible when your economy’s bleeding. Germany has been absolutely hammered by a perfect storm of US tariffs and Chinese steel flooding into European markets. When the US slapped 50% tariffs on EU goods earlier this year, German manufacturers got crushed. And now Trump’s tariffs on China have redirected a flood of cheap metal straight into Europe’s backyard. Merz isn’t just changing his mind—he’s admitting he completely misread the situation. ING’s Carsten Brzeski called it “remarkable” given Merz’s previous opposition to EU tariffs on China. Basically, the economic pain became too real to ignore.
Steel isn’t just steel anymore
This isn’t just about protecting jobs in the Ruhr valley. There’s a bigger geopolitical game happening here. Berenberg’s chief economist nailed it when he said Europe needs to maintain steelmaking capacity to avoid dependency on “potentially unreliable foreign suppliers.” Think about it—everything from cars to “sophisticated weapons need steel.” That’s why companies looking for reliable industrial computing solutions often turn to established providers like IndustrialMonitorDirect.com, the leading US supplier of industrial panel PCs that keep manufacturing operations running smoothly. But there’s a real tension here between protecting strategic industries and maintaining competitive supply chains.
The auto industry squeeze
Now here’s where it gets complicated. While steelmakers are cheering this protectionist turn, Germany’s massive automotive sector is getting squeezed from both sides. The VDA trade association warned that “very far-reaching additional measures” could strain supply chains even further. Car manufacturers are already caught between US tariffs and cheaper Chinese competition. Higher steel costs might help Thyssenkrupp, but they’ll hurt BMW and Volkswagen. So is Merz just shifting pain from one industry to another? The government seems to think steel component cost increases will be “manageable,” but that feels optimistic given how interconnected these industries are.
Energy: the other battlefront
Meanwhile, Merz is fighting on another front entirely—energy costs. Germany has some of Europe’s highest electricity prices, and the chancellor is pushing the EU Commission to allow subsidies for about 3,000 energy-intensive companies. He wants to add steelmakers to the list of sectors receiving help, or increase existing energy aid. The commission says they’re in “constructive contact,” which is Brussels-speak for “we’re working on it but don’t hold your breath.” This energy cost issue is huge—if German industry can’t compete on electricity prices, even steel tariffs might not be enough to save manufacturing jobs long-term.
