UK steel industry braces for slump in trade as US reduces tariffs on EU

Steel Manufacture

The UK steel industry is braced for an immediate slump in trade from New Year’s Day when European Union rivals will gain a 25% price advantage selling to the giant US market.

The EU and the US reached a Halloween agreement to remove tariffs on a quota of steel and aluminium imported from the bloc into the US from 1 January, but tariffs will remain on all UK steel and aluminium exports after government talks failed to secure a matching breakthrough.

The international trade secretary, Anne-Marie Trevelyan, earlier this month invited the US commerce secretary for further discussions in London, which are understood to be scheduled for January. However, an industry source said they were not optimistic that a deal would be reached quickly.

The tariffs were first introduced by former president Donald Trump in 2018 under section 232 of the Trade Expansion Act on national security grounds. Imports supposedly undermined the US’s ability to produce its own steel.

British exports to the EU could also be hit because of an unusually strict clause in the EU-US agreement that means steel originating in the UK will still attract the tariffs even if worked on and exported by EU companies.

Gareth Stace, the director-general of UK Steel, said: “UK steel exports to the US have halved since President Trump introduced steel tariffs in 2018. There can be no doubt these measures have significantly harmed the UK’s interests in its second biggest steel export market.

“Whilst we welcome the move by the US to start easing its tariffs, without a UK deal in very quick succession, our export position will only deteriorate further. It is essential that the government strains every sinew to secure a deal and ensure that UK steelmakers are able to sell their steel into the United States.”

Harish Patel, the national officer for steel at Unite, a trade union representing many British steelworkers, said the government needed to explain why the EU had a deal but the UK did not, amid reports that the US was holding back over the UK’s threats to unilaterally change post-Brexit trading rules governing Northern Ireland.

The UK negotiated the so-called Northern Ireland protocol barely a year ago as part of the Brexit trade deal with the EU, but it has repeatedly said it may unilaterally break it off. President Joe Biden has warned Boris Johnson against threatening peace on the island of Ireland.

Junior international trade minister Penny Mordaunt this month denied that the failure to reach a steel deal was linked to Brexit. She told parliament: “That story might be true in terms of how some people in the United States feel, but it is a false narrative. These are two entirely separate issues.”

Patel said: “It is alarming that British-produced steel is being effectively locked out of the critical steel market, as the continuing tariffs make EU steel considerably cheaper.

“The government has to sort this matter out quickly. Unless the tariffs are speedily lifted, hundreds of jobs in the steel and associated industries, most of them in so-called red wall seats, are at risk.”

A government spokesperson said: “We recognise the vital role the steel sector plays in our economy and our priority is to resolve this dispute to the benefit of workers and businesses on both sides of the Atlantic, removing the need for the UK to levy retaliatory tariffs on US goods.

“Until that resolution is agreed, the UK will continue to apply its rebalancing measures to defend our economic interests and the rules-based international trading system.”