BRUSSELS, Jan 6 (Reuters) - Safeguards proposed by the European Union to protect EU steel mills from the impact of imports would lead to crippling price hikes for European manufacturers, a lobby group representing European steel-using industries said on Tuesday.

The European Steel Using Industries, a group of lobbies representing manufacturers of goods from cars and home appliances to agricultural machinery, said the measures "go too far in ring-fencing the European market".

"We urge EU policymakers to ensure a more careful and balanced approach in the legislative process to adopt the measure, which must... adequately reflect the significant concerns and challenges faced by European steel users," it said.

The European Commission has proposed cutting tariff-free steel import quotas by almost half and a 50% duty for excess shipments in a bid to preserve viable steelmaking in the EU.

The European manufacturers using steel said protection for local mills could cost them between 5 billion euros ($5.86 billion) and 9 billion euros in extra tariff costs each year.

The Commission estimates a 3.25% price increase on steel on average, but steel buyers said they estimate prices could rise up to 30%, which they said would hurt their competitiveness in their respective international markets.

Due to rising imports and U.S. tariffs, EU steel producers were operating at only 67% of capacity, and the new measures are designed to push that towards 80%.

The Commission proposed a tariff-free import volume of 18.3 metric tons a year, down 47% from 2024 quotas, and a doubling of the out-of-quota duty to 50%.

The EU Commission and the countries with the largest steel industries fear the tariff-free imports would harm domestic producers.

Car manufacturers and countries selling steel in the EU such as Britain criticized the measure back in October.

($1 = 0.8529 euros)

(Reporting by Inti Landauro; Editing by Jan Harvey)