EU GOES Safeguard Extends to Transformer Value Chain
Policy Background: From Raw Material Safeguard to Full Value-Chain Coverage
Origins and Legislative Timeline
On 18 September 2026, the European Commission adopted a provisional safeguard regulation covering imports of grain-oriented electrical steel (GOES), laminations and transformer cores produced from GOES, and the cores incorporated in imported transformers. The measure enters into force on 25 September 2026 and runs for 155 days until 26 February 2027, providing a transitional framework while the safeguard investigation continues. Any definitive measure will require a qualified majority in the EU Safeguards Committee — at least 15 Member States representing at least 65% of the EU population.
The investigation was triggered by a request submitted jointly by Germany, France and Poland on 2 March 2026. The Commission formally opened the case on 27 March, initially covering GOES, steel laminations and transformer cores used in transformers and inductors. The scope was later extended downstream to cover cores contained in imported transformers, closing a potential loophole in which GOES could be processed into cores outside the EU and shipped as finished equipment.
Scope of the Investigation
During the investigation, the Commission received 34 questionnaire responses and 65 additional written submissions from producers, exporters, importers, users, industry associations and third-country authorities. It also held 30 hearings with interested parties and carried out verification visits, including at the two existing EU GOES producers and at transformer manufacturer SGB-Smit in the Netherlands. This breadth of evidence-gathering gives the provisional findings a relatively solid factual foundation.
Design Philosophy: Safeguard, Not Prohibition
Unlike the punitive logic of anti-dumping duties, the Commission chose a tariff-rate quota combined with a price-threshold mechanism. The provisional measure does not prohibit GOES imports; instead, it imposes a safeguard duty equal to the difference between the threshold price and the import price when the import falls below the threshold, and collects no duty when the import price is at or above the threshold. This design protects EU producers while preserving market access for imported material and avoiding a complete disruption of the supply chain.
Market Shock: Imports Surge 120% and Domestic Share Halves
Consumption and Import Structure
Investigation data show that EU consumption of GOES, laminations and cores increased from approximately 398,000 tonnes in 2021 to 525,000 tonnes in 2025, a 32% rise. Over the same period, imports grew by 120%, lifting the import share of EU consumption from 34% to 57%. The data indicate that while end-use demand expanded, the EU’s dependence on external supply deepened significantly during the period examined.
Pressure on EU Producers
EU producers did not share in the growth. Their domestic market share fell from 66% in 2021 to 43% in 2025, while production declined by 9%. Capacity expanded by 9%, but capacity utilisation dropped from 85% to 71%. Most strikingly, profitability on domestic sales fell from 8.4% in 2021 to 3.6% in 2025, turning negative in 2024. This financial deterioration is the central evidence supporting the Commission’s finding of serious injury.
The Chinese Share Spike
China’s share of EU imports rose from 20% in 2021 to 53% in 2025. The Commission also identified global GOES overcapacity of more than 842,000 tonnes, more than twice EU consumption, and linked increasing import pressure partly to that overcapacity and to the closure or restriction of other export markets. Other significant supplying countries include Japan and South Korea, both allocated specific quotas in the provisional regulation.
Price Thresholds and Quota Mechanics
Tiered Price Thresholds
The provisional regulation sets differentiated price thresholds for different product forms, reflecting recognition of downstream value-add:
| Product | In-Quota Threshold | Out-of-Quota Threshold |
|---|---|---|
| GOES (by grade) | €2,800 – €3,400/tonne | €3,500/tonne |
| Laminations | €4,000/tonne | €4,550/tonne |
| Cores | €5,000/tonne | €5,600/tonne |
When the import price is below the applicable threshold, the safeguard duty equals the difference between the two. When the import price is at or above the threshold, no duty is collected. This mechanism effectively establishes price floors for different product grades while preventing low-price dumping from disrupting domestic production.
Country-Specific Quotas
Provisional GOES quotas include approximately 30,694 tonnes for China, 23,104 tonnes for Japan and 4,790 tonnes for South Korea, plus a separate quota for other supplying countries. Laminations and cores are subject to separate quota systems. Iceland, Liechtenstein, Norway, Kenya and Ukraine are fully exempt; most developing WTO members are also exempt because of their limited import share. Among developing countries, the measure applies to China for GOES, laminations and cores, to Brazil for GOES, and to Türkiye and the United Arab Emirates for laminations and cores.
Special Treatment for Cores Inside Imported Transformers
To address the risk that producers outside the EU could process GOES into cores and then export finished transformers to circumvent the measure, the Commission applies a different mechanism to cores contained in imported transformers. Instead of a tariff-rate quota, a fixed provisional safeguard duty of €1,140 per tonne is applied to the weight of the core inside the imported transformer. This number is significantly lower than the €5,000/tonne standalone core threshold, reflecting partial recognition of finished-equipment value-add while ensuring EU Hitachi Energy Mississippi transformer factory plan face comparable input costs to non-EU competitors.
Interaction With Existing Anti-Dumping Duties
Where imports are subject to existing EU anti-dumping duties in addition to the provisional safeguard, the anti-dumping duties will not be collected during the provisional safeguard period where the safeguard duty applies (because anti-dumping rates are lower than safeguard thresholds). This avoids double-stacking for importers.
Logic and Controversy of the Value-Chain Extension
Why Import Transformers Were Included
During the investigation, stakeholders argued that a safeguard covering only GOES and separately imported cores and laminations could be circumvented by processing GOES into cores outside the EU, incorporating those cores into finished transformers, and then exporting the transformers to the EU. The Commission accepted this argument and extended the measure to the core material contained in imported transformers.
Protective Intent for EU Downstream
A source connected to the legislative process told Transformer Magazine that the extension was considered important for maintaining protection across the value chain. EU producers of GOES, laminations and cores are directly covered by the safeguard, while applying the measure to cores in imported transformers is intended to avoid placing EU transformer manufacturers at a competitive disadvantage when competing with equipment produced outside the EU.
Internal EU Disagreement
On 17 September, the EU Safeguards Committee, which includes representatives of all Member States, delivered no opinion on the Commission proposal. Ten Member States voted in favour, six voted against and 11 abstained. The Commission subsequently adopted the provisional regulation on 18 September under the standing provisions of the Safeguards Regulation. The vote breakdown reflects significant divergence among Member States between protecting the upstream domestic industry and preserving the competitiveness of the downstream equipment sector.
Cost Pass-Through and Downstream Impact
GOES Share of Transformer Cost
GOES typically represents between 10% and 30% of the total cost of a transformer. Based on this, the Commission estimated that the additional cost resulting from the safeguard should in most cases represent only a small percentage of the transformer cost. This calculation underpins the Commission’s conclusion that the impact on the downstream sector remains manageable.
Pushback From the Equipment Industry
Despite the Commission’s assessment, parts of the European transformer and electrical equipment industry have raised strong concerns. With grid expansion driving strong demand for new transformers, higher GOES costs could erode the global competitiveness of EU transformer manufacturers and ultimately raise the unit investment cost of European grid upgrades. These concerns were raised repeatedly during the consultation phase, but the Commission ultimately concluded that the cost increase is generally limited and does not undermine the necessity of the safeguard for the domestic upstream sector.
Other Injury Factors Excluded
The Commission also evaluated high European energy prices and the EU industry’s limited ability to supply the highest GOES grades. It concluded that these factors did not break the causal link between rising imports and the deterioration in the position of European producers. In other words, the EU GOES industry’s difficulties are primarily attributable to import surge, not to energy cost or technological limitations.
Global Context and Forward Path
Roots of Global Overcapacity
Global GOES overcapacity exceeds 842,000 tonnes, more than double EU annual consumption. This surplus stems mainly from capacity expansion in Asia, the closure or restriction of other major export markets, and slowing global demand growth. The overcapacity has created an incentive for low-price exports, with part of the pressure now spilling into the EU market.
Potential Linkage With CBAM
The safeguard complements the EU Carbon Border Adjustment Mechanism (CBAM), which taxes high-carbon imports such as steel based on embedded carbon, while the safeguard provides trade relief against specific industry injury. The two instruments are complementary in nature but partially overlap in coverage (such as steel laminations). Any definitive safeguard design must consider the interaction with CBAM to avoid stacked compliance burdens on importers.
From Provisional to Definitive
The provisional regulation expires on 26 February 2027, at which point the Commission will decide whether to convert it into a definitive measure based on the final investigation findings. A definitive measure requires a qualified majority in the Safeguards Committee — at least 15 Member States representing at least 65% of the EU population. Given the 10-6-11 voting breakdown on the provisional measure, the legislative battle over the definitive design will be more intense. GOES producers, transformer manufacturers and their respective industry associations hold differing views on cost and competitive effects, and whether the provisional framework can be converted into a design acceptable to all stakeholders remains an open question.
Implications for Global Transformer Supply Chains
By extending the safeguard to cores inside imported transformers, the EU has set a precedent for using trade-remedy instruments to cover specific components inside downstream finished goods. This design may be emulated by other jurisdictions — particularly given that electrification is rapidly increasing demand for GOES and other grain-oriented steels. For transformer exporters targeting the EU market, raw-material traceability and core-weight declaration are becoming new compliance requirements.
Closing Observations
The EU’s provisional GOES safeguard is one of the most structurally significant policy events in the broader power transformer industry coverage during the second half of 2026. Its innovation lies not only in covering GOES, laminations and standalone cores, but in extending the measure to the cores inside imported transformers, closing the loophole of “processed-then-assembled” circumvention. In terms of policy effect, the provisional regulation seeks to balance protection of the domestic upstream GOES industry with preservation of imported-material access for industry perspective on choosing the right enameled wire for motor and transformer modification, while retaining market openness through price thresholds and quotas. However, the 10-6-11 Safeguards Committee vote, the cost-pass-through concerns of EU equipment manufacturers, and the persistence of 842,000 tonnes of global overcapacity will all make the definitive design a focal point of stakeholder negotiation. Before 26 February 2027, exporters and importers targeting the EU market should reassess their transformer export structure, core-procurement layout and customs-compliance procedures in light of the new framework.