Head of Trade & Customs
Navigating Steel Trade Complexity: TRQs, CBAM, and the Supply Chain Challenge
The steel industry faces unprecedented regulatory complexity with evolving trade policies, tariff rate quotas, and the impending CBAM reporting requirements. This comprehensive analysis explores how companies can navigate these regulatory waters while maintaining competitive advantage.
The Media's Trade Coverage Problem
If it didn't become apparent during Brexit then the subsequent reporting on Trump's tariffs might have finally made clear that when it comes to covering international trade and all its intricacies, the mainstream media don't exactly cover themselves in glory.
However, there are exceptions. Some articles manage to capture the different facets of the steel supply chain that make navigating the process so perilous and time-consuming. The nuances contained within these complex trade mechanisms deserve careful attention, and I want to share my reflections on the key challenges facing the industry today.
The Hidden Complexity of Tariff Rate Quotas
An article about the steel supply chain that mentions and provides detail on Tariff Rate Quotas (TRQs) is a rare thing indeed. Even rarer is the mention of something that will have much more consequence than a single sentence suggests: CBAM.
Many in the industry will have intimate knowledge of TRQs, yet that knowledge is not as widespread as you might think. I still encounter companies that either are not aware of, or do not fully understand the implications of a TRQ. When the carrot of a cheap deal on Chinese steel gets dangled in front of them, they are happy to roll the dice, only to be caught at the point of import with duties of 25% upwards.
The Chinese Steel Overcapacity Reality
Chinese steel has an overcapacity of 500 million tonnes, and by next year that could reach 720 million tonnes. While this means there are bargains to be had, they're only accessible if you understand TRQs and can manage them effectively.
Cost and compliance concerns don't always go hand in hand. Since many supply chain departments don't have time to be Masters of the Customsverse while also delivering PPV magic, it can be a difficult paradox to manage. The pressure to find cost savings often conflicts with the need to maintain regulatory compliance.
"It is possible though and ChainMill are leading the charge to assist you in managing that paradox in a beneficial way by simplifying the TRQ process and keeping you updated in real time."
The CBAM Revolution: A Non-Negotiable Future
In January 2026, EU CBAM reporting becomes a non-negotiable requirement with the threat of financial penalties for non-compliance. The UK aims to follow suit 12 months later. This represents a fundamental shift in how companies must approach their supply chain documentation and reporting.
Here too, ChainMill is positioned to be the link between your business, your suppliers, and your customers. We're freeing your supply chain team to do what they're supposed to do: sourcing the products you need, from the right place, at the right time, and most importantly at the right cost - without needing to worry about the hidden consequences of regulatory burdens that are not always communicated with clarity and consistency.
Export TRQs: The Other Side of the Coin
While Part 1 focused on TRQs from an import perspective, there's another critical dimension: the introduction of TRQs for exports to America. This could very well have a knock-on effect on the use of Chinese steel in your manufacturing process - one that should be considered when sourcing your product, even if you are successfully managing import TRQs or are lucky enough not to have them apply to your purchasing profile.
While the focus may be on the EU-US deal, the same caveats will likely apply to the UK-US deal. How much benefit they provide will depend on how large those allocations are. While initial estimates suggest they might not be as open as the industry would hope, at this point, any easing of the current challenges would be welcome.
The Origin Conundrum: Where Steel is Poured Matters
As in all things trade-related, the devil will be in the detail. That pesky old topic of preferential vs non-preferential origin will almost certainly play a significant role. In this instance, there is a belief - and precedent in previous US implementations - that even if your finished product can be correctly declared as UK or EU origin through the usual means, the qualifying factor for importation under any allocation available will be decided by where the steel used in the manufacturing process was originally poured.
The Chinese Steel Trap
This means if a company were enticed by a cheap deal on Chinese steel, it might not be able to avail of any available TRQ allocation, regardless of where the final product is manufactured or assembled.
The Path Forward: Traceability as Competitive Advantage
Mapping the prospective journeys of your steel products through the entirety of the supply chain process will become even more important than ever. Managing TRQs will be an integral part of this process, and the ability to provide clear and concise traceability will be key to success.
As in all things supply chain related, trust, speed, and accuracy are what separates the good from the great. Here at ChainMill, we are laying the foundation to give companies that edge by providing a supportive ecosystem that will negate the need to spend countless hours and resources on the burden of bureaucracy.