Is protectionism punishing innovation?

Metal industries are the national export champions of the Portuguese economy. They account for around a quarter of total exports and more than a third of manufacturing industry sales abroad. Indeed, they effectively underpin value chains across the economy. And this is not unique to Portugal.  

Productivity and industrial sovereignty converge 

Beyond the export weight, metal industries play a structural role in Europe’s industrial ecosystem. Steel is transformed into high-value products through engineering, digitalisation, automation and advanced production processes, supporting a range of industries across the economy, from automotive and energy to machinery and construction. Advanced Manufacturing is truly where innovation, productivity and industrial sovereignty converge.  

Yet while the European Commission focuses on protecting the EU’s steel industry from global overcapacity and unfair competition, the proposals have the opposite effect for European manufacturing. Measures designed to protect one segment of the value chain are going to come at the expense of Europe’s overall competitiveness, investment capacity and export performance.  

The effect on Advanced Manufacturing, an industry born of innovation, improved techniques, and intelligent technology, will be severe. The scale of the exposure will have immediate consequences and long-term derogatory impacts, curtailing our own industrial transformation capacity. 

In fact, by imposing tariffs of up to 50% on steel imports – while continuing to allow the entry of finished products -Europe is forcing our industries to absorb higher costs for raw materials, while still competing with finished goods that are produced elsewhere under less restrictive conditions. This imbalance actually discourages investment in European industries and increases the likelihood of European companies relocating their production to outside of the European Union: precisely the two outcomes the policy intended to avoid.

AIMMAP expressed these concerns directly to the Executive Vice President of the European Commission responsible for Prosperity and Industrial Strategy, Stéphane Séjourné, during a meeting held in Lisbon last. AIMMAP Vice President, Rafael Campos Pereira  explicitly underlined that although Europe may have strategic and geopolitical reasons to produce steel, it cannot do so at the expense of its entire downstream manufacturing industry.  

Forging an industrial strategy 

The final decisions for Europe’s industrial strategy do not rest solely with the European Commission. It is our hope that the European Council still has the power to mitigate or recalibrate these measures during the ongoing legislative process. 

A more balanced approach – that safeguards steel production while also protecting downstream manufacturing – would better serve Europe’s long-term industrial interests. Dialogue with industrial associations and manufacturing stakeholders is essential to ensure that policy decisions reflect the full complexity of industrial value chains.  

Focusing narrowly on certain raw materials, and simply overlooking or ignoring damage to other areas of the manufacturing ecosystem, will cause the total collapse of our competitiveness. Because industrial competitiveness is not built through isolated measures. We need coherent, integrated policies that recognise how industries interact. 

Manufacturing depends on predictable access to materials, fair competition and a regulatory framework that rewards value creation rather than penalising it. If Europe wishes to remain a global industrial player, it must ensure that its trade and industrial policies reinforce not undermine the companies that transform materials into innovation, exports and skilled employment.  

The debate on steel tariffs is about more than trade defense: it is about the kind of industrial producer Europe intends to be.