The concentration print: Türkiye's trade tilts into a tightening EU

What the first quota period did

The old safeguard expired on 30 June 2026. Regulation (EU) 2026/1384 replaced it from 1 July with a purpose-built instrument intended to run to 2031. Tariff-free quotas across 26 product categories fall by roughly 47% against the 2024 safeguard baseline, to 18.3 million tonnes a year, and the duty on out-of-quota tonnes is 50% ad valorem on top of most-favoured-nation duty. Quotas are administered quarterly. Through 2026 and 2027, unused quarterly volume can be carried into the following quarter inside the same annual cycle.

The first fortnight produced a queue rather than a forecast. EU customs data on 14 July 2026 showed more than 370,000 tonnes of Turkish hot-rolled coil pending clearance against a quarterly quota of about 160,000 tonnes — more than double the window. Tonnes that miss the quota do not stop; they pay 50%.

The origin requirement follows on 1 October 2026, when melt-and-pour evidence becomes the test. That changes what a supplier has to be able to prove, not just when they ship. A mill that cannot document where the steel was melted and poured is exposed regardless of its quota position.

The steel regime, as it now stands

The export prints since publication

This brief was built on the May print. Three more have been published since.

TİM monthly and cumulative prints; EU-bound half-year figures reported at $54.5–54.6 billion across outlets, both drawn from the same TİM compilation. Steel tonnages are Turkish Steel Producers' Association (TÇÜD) data. The 2025 EU share and rank figures cited in the PDF are the European Commission's and sit on a different base; the two are not mixed.

The differential the thesis rested on has narrowed

The claim in June was specific: EU-bound exports were growing at roughly twice the pace of total exports. On the January–April prints that held — $35.22 billion to the EU, up 6.31%, against total exports up 3%.

Across the full half it does not hold in the same form. EU-bound exports rose 4.7% and total exports rose 3.6%. The EU line is still growing faster, but by 1.1 points rather than 3.3.

Our stated test in June was that if EU-bound growth converged to or below total export growth across the H1 close and the Q3 prints, we would downgrade the serial. It has converged without crossing. That is a partial trigger, and the Q3 prints decide the rest. We are carrying the thesis as weakened rather than confirmed, and would rather say so than round the half-year print towards the June framing.

The steel line is the sharper reading. Türkiye shipped 7.9 million tonnes of steel to the EU in 2025, 40.7% of its steel exports. In the first half of 2026 EU-bound steel fell 22% to 2.6 million tonnes while total steel exports rose 2.5% to 7.8 million tonnes, with Middle East and South American demand taking up the difference. The EU was the only regional market where Turkish steel shipments declined. That happened before the new regime applied.

The instrument stack

Four instruments sit on the same flow. They work through different mechanisms and they do not cancel each other.

The safeguard replacement — volume

Covered above. The mechanism is volume: the quota decides how many tonnes cross at zero duty, and timing decides whose tonnes. From October, origin evidence decides whether a tonne qualifies at all.

CBAM — carbon, and a correction

2026 is the first year of the definitive regime. The June brief described importers as surrendering certificates against 2.5% of embedded emissions. That describes the arithmetic outcome but not the mechanism, and the difference matters when you are explaining it to a buyer.

The obligation is calculated on the full embedded emissions of the imported goods. It is then reduced by an adjustment reflecting the free allocation still given to EU producers — the CBAM factor, set at 97.5% for 2026 under Article 10a(1a) of Directive 2003/87/EC, falling to 95% in 2027, 90% in 2028 and to nothing by 2034. So the factor is a credit against the obligation, not a discount on the certificate price. The net effect in 2026 is a charge on about 2.5% of embedded emissions; the exposure being priced is the full amount, arriving on a published schedule.

The certificate price is quarterly and each quarter's price applies to goods imported in that quarter. Q1 2026 was €75.36 per tonne of CO₂e; Q2 2026 is €75.28. The Q3 price had not been published as at 7 August 2026. CBAM applies to steel, aluminium, cement, fertiliser, electricity and hydrogen regardless of quota position — a tonne inside the quota still carries its carbon cost, and the two instruments should be priced separately.

Made in EU — procurement origin

This has moved from a framework in discussion to a text on the table. The European Commission tabled the Industrial Accelerator Act on 4 March 2026, carrying minimum EU-content and low-carbon requirements in public procurement for energy-intensive industries and electric vehicles.

The provision that matters for Türkiye is the definition. In the proposal, content originating in countries with a free trade agreement or a customs union with the EU, or party to the WTO Government Procurement Agreement, counts as equivalent to EU content for procurement purposes. On that drafting, Customs Union goods are inside the perimeter. İstanbul Chamber of Commerce president Şekib Avdagiç called the first-stage inclusion positive in the spring and flagged the stages ahead; those stages are still ahead. Adoption is not expected before 2027, and a definition that survives to adoption is not the same as a definition in a proposal.

The governing layer — the modernisation mandate

The Customs Union entered into force on 31 December 1995 and covers industrial goods. It obliges Türkiye to align with EU commercial policy but does not extend the EU's trade agreements to Türkiye, so each new EU free trade agreement gives a third country preferential access to the market Türkiye is concentrating into while Türkiye's own margin stands still.

The Commission proposed modernisation in December 2016. As at 7 August 2026 the Council has still not adopted negotiating directives, and formal negotiations cannot begin until it does. Trade Minister Ömer Bolat said in late January 2026 that 15 of 29 identified problem areas had been resolved, and a joint statement in February 2026 put willingness on record. Since then Bolat has continued pressing the file in Brussels; he attributes the delay to objections from several member states rather than to the Commission, which supports extending the agreement to services and e-commerce. Process has continued. A mandate has not appeared.

What this means for three decision classes

Turkish exporters into the EU

Quota position is now a scheduling variable with a price. Shipping early in a quarterly window is worth real money in Türkiye-relevant categories, and the July queue shows how quickly the window fills. Two files decide the rest: origin documentation that survives melt-and-pour scrutiny from 1 October, and emissions data that runs from the melt shop through to the importer's CBAM declaration. Both take months to build and neither can be assembled in the week a shipment is booked.

European buyers

Qualified Turkish supply is scarcer than total Turkish supply, and the gap between the two widened this summer. A supplier with audit-ready origin evidence and verified emissions data is a different asset from one with the same mill and no file. The practical step before the October origin requirement is to ask your existing suppliers for both, in writing, and to find out which of them can answer. The wider argument for how European buyers should read Turkish supply is on our European market entry page.

Companies weighing a second production base

Nothing in the 2026 instruments removes Customs Union access for industrial goods; tariffs stay at zero. What has changed is the cost of proving that a good qualifies. If the Industrial Accelerator Act keeps its current treatment of Customs Union content, that perimeter becomes a procurement asset as well as a tariff one — but that is a 2027 question and should be treated as an option rather than a plan.

Three things to watch over the next twelve months

• The Q3 export prints. The half-year close narrowed the EU-versus-total growth differential from 3.3 points to 1.1. If the third quarter narrows it further or reverses it, the concentration serial gets downgraded on the test we set in June.
• Quota draw speed and the first 50% duty events. The July queue was the first reading. The second is how quickly the fourth-quarter window fills, and whether the carry-forward provision absorbs any of it. The melt-and-pour requirement from 1 October is the next dated step.
• The mandate file and the Accelerator Act text. Council authorisation of negotiating directives would reprice the corridor more than any single quota figure here. In parallel, whether Customs Union content survives to adoption as EU-equivalent in the Industrial Accelerator Act decides whether public procurement is a door or a wall.