Steel’s Carbon Shell Game — Europe’s Hidden Emissions Subsidy

Last update: 06.16.2025

When climate leadership is brandished to shield carbon-heavy incumbents, environmental pledges cease to be solutions—they become smoke-screens for the status quo. When climate leadership is brandished to shield carbon-heavy incumbents, environmental pledges cease to be solutions—they become smoke-screens for the status quo.

Since 2020, Brussels and Washington have wrapped themselves in “fair-trade” and “green-transition” rhetoric while erecting tariff walls that target the one supplier able to cut their emissions footprint today: Türkiye. Scrap-fed Turkish electric-arc-furnace (EAF) coils land with up to 60 % less CO₂ per tonne, yet they are met with anti-dumping duties, safeguard quotas and even Section 232 tariffs. The real mission is bluntly strategic: cripple Türkiye’s cost-and-carbon advantage, buy two or three extra investment cycles for Europe’s ageing blast-furnace fleet, and rebuild domestic competitiveness before genuine market forces can reward cleaner steel. The manipulation runs deep. Trade-defence tools—designed to address predatory pricing—are repurposed to subsidise delay, transfer billions in duty revenue to high-carbon incumbents and inflate home-market prices. In doing so, the EU and US not only upend free-market principles; they also collide head-on with the UN’s entire sustainability architecture. By blocking lower-carbon imports, they violate the spirit of multiple Sustainable Development Goals—indeed, the very logic of all 17 SDGs that hinge on climate action, equitable growth and rule-based commerce. Put plainly: tariffs dressed in green are strangling Türkiye’s competitiveness today so Europe’s legacy producers can survive long enough to claim they have gone green tomorrow.
The tell-tale timing ArcelorMittal put a €1.7 billion hydrogen-DRI project at Ghent on ice just as it masterminded a petition that inflated EU hot-rolled prices long enough to keep ageing furnaces profitable [5]. Thyssenkrupp Steel Europe scrapped its tkH₂Steel hydrogen tender when bids hit €180 – 210 MWh, yet still backed the same duty wall to revive blast-furnace margins [6]. Voestalpine postponed a €1 billion hybrid-EAF plan, then conveniently secured fresh duties on galvanised sheet—channelling the windfall into a coke-oven overhaul rather than green steel [7]. Liberty Steel keeps its HIsarna pilot idle pending a €350 million state loan; tariffs prop up the cash flow in the meantime [8]. Tata Steel NL pushed its IJmuiden EAF conversion beyond 2029 (cutting 1 600 jobs) but continues to benefit from high domestic prices buttressed by EU safeguards [9]. The climate arithmetic Diverting just four million tonnes of Turkish EAF coil into EU blast-furnace supply injects five million tonnes of extra CO₂, €450 million in additional carbon-certificate costs, and enough surplus energy to power every Austrian home for more than a month. That is not climate policy; it is pro-carbon protectionism dressed in green. Why the rules stay broken The WTO Anti-Dumping Agreement and the EU’s Basic Regulation count prices, not carbon. They treat a 0.68-t CO₂ EAF tonne and a 1.93-t CO₂ BF tonne as identical when “injury” is calculated. With the WTO Appellate Body paralysed since 2019, jurisprudence cannot evolve; until embedded-carbon metrics enter trade law, cleaner exporters will keep paying for others’ pollution [38] [39] [40].

References [5] Hydrogen Insight. “ArcelorMittal delays Ghent hydrogen-DRI project over high power costs.” 26 Nov 2024. [6] Eurometal. “Thyssenkrupp pauses tender for green hydrogen on cost grounds.” 11 Apr 2025. [7] voestalpine AG. Q3 2024/25 Results & Greentec Update. 12 Feb 2025. [8] SteelOrbis. “Liberty Ostrava pilot idle pending state-aid decision.” 9 May 2025. [9] DJJ Commodities. “Tata Steel NL delays IJmuiden EAF shift to post-2029.” 21 Apr 2025. [38] Wolfe, R. “Reforming the WTO’s broken appeals mechanism.” Global Policy 14 (1), 12-19 (2023). [39] European Commission Regulation (EU) 2016/1036 (Basic Anti-Dumping Regulation). [40] Howse, R. “The appellate crisis and interim dispute-settlement pathways.” Journal of World Trade 56 (4), 593-608 (2022).

Ironies of Protectionism: How the U.S. Redefined Free Trade with Tariffs and Monopsony Power

Last update: 02.11.2025

When protectionist policies are cloaked in the rhetoric of free markets, economic contradictions aren't anomalies—they become structural features of global trade.

In 2018, the United States imposed an additional 25% tariff on all steel imports under Section 232. This decision impacted global trade balances and had varying effects on different countries. While countries like Canada, Mexico, the EU, Brazil, and South Korea secured exemptions from this tariff, Turkey did not benefit from such an advantage. Data-Driven analysis of U.S. steel import data from 2015 to 2024 reveals striking trends. Using 2018 as the base year, the indexed import volumes show the following patterns:
Turkey: The index value, which was 245 in 2015, dropped to 100 in 2018 and plummeted to 28 in 2019. As of 2024, it has only risen to 37. Canada and Mexico: Post-2018, their import levels remained relatively stable, with even an increase observed between 2021 and 2023. EU, Brazil, and South Korea: Despite fluctuations, these countries did not experience dramatic declines in import volumes. Total U.S. Steel Imports: During the same period, the U.S. total steel import index was 113 in 2015, 100 in 2018, dropped to 81 in 2019, 65 in 2020, and stabilized at 84 by 2024. This indicates that while there was a general decline in U.S. imports, Turkey's loss was disproportionately severe. Turkey’s Dramatic Decline: Is It Just the Tariff? This data prompts the question of why Turkey was more severely affected than other countries. Exemption Factor: Countries like Canada, Mexico, and the EU obtained exemptions due to free trade agreements and special diplomatic statuses with the U.S., an advantage Turkey lacked. Anti-Dumping and Additional Tariffs: Turkey also faced additional anti-dumping investigations and countervailing duties in its trade with the U.S. Political Tensions: Increasing political tensions between the U.S. and Turkey after 2018 negatively impacted trade volumes. Inflation and Currency Fluctuations: Turkey's rising inflation and currency fluctuations over the years weakened the competitiveness of Turkish steel exporters, eroding their price advantage in the U.S. market. This led to increased costs, price instability, and further declines in exports. A Curious Case of National Security: If Section 232 tariffs are genuinely rooted in national security concerns, one might wonder: Are countries like Canada, Mexico, the EU, Brazil, and South Korea posing equal security threats to the U.S.? The irony here is striking. Many of these nations are close allies of the U.S., some even NATO members. Interestingly, Turkey, also a NATO member, found itself excluded from exemptions. Perhaps national security has a flexible definition—one that conveniently aligns with economic and political interests when needed. And here's the ultimate irony: If the rationale was truly national security, then by imposing these tariffs on almost every country globally, does that mean the U.S. suddenly viewed the entire world as a security threat? It seems that Section 232 transformed into a rather creative tool, redefining "global threats" with a simple stroke of policy—one that conveniently spared some friends while targeting others. The WTO's Paralysis- A Missing Player in the Equation; Following the imposition of Section 232 tariffs, many experts placed their hopes on the World Trade Organization (WTO) to mediate and provide a resolution. However, the irony deepens: since 2018, the WTO has failed to deliver any effective solution. Instead of fulfilling its intended role as the guardian of global trade rules, the WTO found itself gridlocked, unable to enforce rulings or mediate disputes effectively. While nations turned to the organization seeking clarity and justice, it became apparent that the WTO's mechanisms were ill-equipped to address such unilateral actions by a major power like the U.S. And let's not forget the greatest irony of all: the WTO was established after World War II with the noble goal of fostering global development and preventing economic conflicts. Back then, the U.S. championed international cooperation, caring about the stability of the global economy. Fast forward to today, and the same country seems to be at odds with almost every other nation through trade barriers. Perhaps we've come full circle—from a world where the U.S. sought to unite nations to one where it conveniently isolates them under the guise of "national security." A Paradox of Protectionism-The Utopian Dilemma: Here lies another striking paradox: how can the world's largest net importer of steel, a country that heavily relies on foreign steel to meet its industrial demands, adopt such extreme protectionist measures? It's almost utopian to believe that shielding domestic producers through tariffs will not disrupt the very supply chains the U.S. depends on. In reality, these measures often lead to increased costs for American manufacturers, who rely on imported steel for sectors like automotive, construction, and defense. Protecting local industries while being fundamentally dependent on global imports reflects a policy contradiction that defies basic economic logic. The Monopsony Effect-The Invisible Hand Behind the Tariffs: Adding another layer to this paradox is the concept of monopsony. While the U.S. is not the sole buyer of steel globally, its immense demand positions it as a dominant buyer with significant influence over global pricing and trade dynamics. This monopsony-like power allows the U.S. to set terms and exert pressure on suppliers, knowing that many steel-exporting countries rely heavily on the U.S. market. Ironically, despite this leverage, the U.S. chose to implement protectionist tariffs that disrupt the very market conditions it could otherwise control through its buying power. In effect, the U.S. acts as both the powerful buyer and the self-imposed barrier, a contradiction that underscores the complexity—and perhaps the short-sightedness—of its trade policies. Considering this, expecting a solution from the WTO now might be the greatest irony of all. Conclusion: The significant decline in Turkey's steel exports to the U.S. cannot be explained solely by the 25% tariff. It is the result of deeper commercial, political, and macroeconomic factors. Despite the general decline in U.S. total imports, Turkey's sharper losses underscore the importance of these factors. And finally, we've discussed monopsony, Section 232, and the U.S.'s sweeping 25% import tariffs on nearly every country. Isn't it curious how a country that claims to champion free market economics operates under such protectionist principles? :) If we return to the basics that everyone understands, of course, prices will rise in the U.S. market, leading to a global steel inflation. This adjustment won't happen overnight in other countries' domestic markets but will gradually converge with U.S. prices over several months. As we speak, suppliers are likely already initiating discussions to sell products to the U.S. But there's an even bigger card hidden in the background: forced labor, often referred to as modern slavery. I hope you haven't overlooked this. Beyond macroeconomics, this is the tool where all political instruments will come into play. Just start reading the legislations of countries like the U.S., EU, Australia, and Canada. The topic began with the Uyghur population subjected to forced labor in China, but populism demands broader narratives. In fact, the issue of forced labor has expanded far beyond its initial focus. It now encompasses broader concerns such as wage conditions, unfair labor practices, lack of union representation, and workplace mobbing. This isn't just about China anymore; the implications are global. In a few years, watch how this forced labor issue will leap beyond China's borders, influencing Western Europe, Latin America, and even the Middle East. The manipulation potential of this regulation could be 100 times more impactful than current trade measures, as it provides a legal and moral framework to justify economic actions far beyond traditional tariffs and quotas.

Aykut YEŞİL

Systemic Flaws in the WTO's Oversight of the U.S. Cohen’s d Test: An Economic and Legal Analysis

Last update: 01.09.2025

If you cannot overcome with knowledge, you are doomed to remain an agent and never become an actor. This underscores the necessity of expertise and interdisciplinary insights

Introduction The World Trade Organization (WTO) Dispute Settlement Body (DSB) has long served as the primary forum for resolving global trade disputes. However, the methodology employed by the United States Department of Commerce (USDOC) in anti-dumping investigations, specifically the use of the Cohen's d test, reveals significant deficiencies in the WTO's dispute resolution framework. These deficiencies stem from the lack of an interdisciplinary approach that integrates advanced econometric and macroeconomic principles into legal analyses. Cohen’s d Test: Fundamental Misalignment with Economic Principles The Cohen’s d test is a statistical tool used to measure the effect size between two groups. In the context of anti-dumping, the USDOC applies this test to detect “targeted dumping” based on pricing differences across periods or customer groups. However, this test is fundamentally misaligned with core economic and statistical principles: Violation of Input-Output Price Dynamics: The Cohen’s d test disregards the foundational theory that output prices are heavily influenced by input prices, particularly global raw material indices. Price fluctuations due to raw material costs are not indicative of dumping but rather a reflection of normal market dynamics. Contradiction of the Law of One Price: According to the Law of One Price, in efficient markets, identical goods should have a uniform price when expressed in a common currency, barring transport costs and trade barriers. The Cohen’s d test, by isolating price variations without accounting for global market forces, inherently contradicts this principle. Temporal Cost Volatility and Self-Contradiction: The USDOC’s practice of evaluating costs on a quarterly basis demonstrates an acknowledgment of short-term volatility in raw material prices. The USDOC’s own guidelines suggest that if production costs rise by more than 25% over a quarter, the resulting price changes should reflect those shifts. Additionally, the USDOC often analyzes the correlation between input costs and final product prices to justify its quarterly adjustments. This process confirms that raw material costs directly influence pricing patterns. However, by simultaneously applying the Cohen’s d test, which isolates price shifts without adjusting for raw material-driven fluctuations, the USDOC effectively contradicts its own findings. If input prices are proven to significantly correlate with output prices, removing this influence before running statistical tests becomes crucial. Even if the USDOC were to attempt to normalize product prices by subtracting raw material costs, such a method would still be incomplete. Studies have shown that price normalization strategies often capture only a portion of the external economic drivers—typically around 60% at best—leaving significant room for distortion from unaccounted external factors like currency fluctuations, supply chain disruptions, and global demand changes. The failure to address these influences demonstrates the inherent limitations of using a rudimentary test like Cohen's d, which was originally designed for use in tightly controlled experimental settings (e.g., surveys, social experiments, and production line quality control) where exogenous variables are minimal or irrelevant. Inappropriate Context for Application: The choice of such a simplistic test raises serious questions about intent. If the objective were truly to discern fair pricing, the USDOC could apply more robust techniques that account for raw material price volatility rather than isolating the price changes without consideration for external shocks. Econometric models that use price deflators, for example, adjust for raw material price effects and provide a clearer picture of pricing behavior without overestimating price discrimination. Case Examples of Panel and Appellate Body Findings: Several WTO disputes highlight the flawed application of Cohen’s d and the lack of rigorous economic scrutiny: United States – Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea (DS464): The Appellate Body criticized the USDOC's reliance on Cohen's d for failing to meet the standards of unbiased and objective analysis. However, the economic arguments presented largely centered on procedural fairness rather than the statistical validity of the test itself. United States – Anti-Dumping Measures on Certain Oil Country Tubular Goods from Korea (DS488): This case revealed that price differentials could be explained by changes in global commodity prices. Yet, the economic rationale behind these fluctuations was not adequately considered by either the panel or the Appellate Body. Despite clear indications that external market forces influence pricing, these rulings failed to challenge the statistical methodology's assumptions. Systemic Issues in WTO Decision-Making A key issue within the WTO dispute resolution process is the limited expertise in macroeconomics and econometrics among panelists and Appellate Body members. Legal professionals often dominate these bodies, which can lead to an overly formalistic interpretation of rules without fully addressing the economic realities underpinning trade practices. Absence of Economic Oversight: The lack of macroeconomic expertise means that key economic insights, such as the correlation between input costs and output prices, are overlooked. This has allowed the USDOC to persist with methodologies that have significant flaws. Fragmented Knowledge Flow: WTO panels and complainant nations have often approached disputes from a purely legalistic perspective, focusing on adherence to the Anti-Dumping Agreement rather than questioning the economic premises underlying disputed methodologies. Missed Opportunities for Statistical Refinement: No significant effort has been made to recommend that the USDOC use more robust econometric tools that separate pricing behaviors from external shocks. This includes the suggestion to adjust product prices for input cost variations, a method already employed in various economic analyses and inflation-adjustment frameworks. Consequences for Global Trade Governance: The WTO's inability to challenge flawed methodologies has broader implications: Empowerment of Unilateral Practices:
The failure to address statistical manipulation emboldens dominant economies to implement decoupling strategies that distort global trade flows. Erosion of Institutional Credibility:
As flawed practices persist, confidence in the WTO's capacity to regulate global trade diminishes, particularly among developing nations. A Call for Reform: To address these systemic issues, the WTO must adopt a multidisciplinary approach: Inclusion of Econometric Expertise Panels and Appellate Bodies should include experts in econometrics and macroeconomics to ensure that statistical methodologies are rigorously assessed. Comprehensive Economic Analysis: The dispute resolution process should require parties to present detailed economic analyses that consider external cost drivers, such as raw material price indices. Enhanced Training and Collaboration: WTO officials and legal professionals should receive training in economic theory and statistical analysis to bridge the knowledge gap. Conclusion The continued reliance on the Cohen’s d test without critical economic scrutiny highlights a significant blind spot in the WTO’s dispute resolution framework. As someone who identified these issues early in my career and demonstrated their flaws through econometric regression analysis, I find it alarming that these fundamental concerns remain unaddressed. Until the WTO adopts a more holistic approach that integrates legal and economic expertise, anti-dumping investigations will continue to be shaped by outdated and flawed methodologies, undermining the very principles of fair trade governance. By addressing these systemic weaknesses, the WTO can restore its role as an impartial and effective arbiter of international trade disputes and safeguard the integrity of the global trading system.

Aykut YEŞİL