Industry chief calls on government to water down steel tariff plans
Government plans to double tariffs on steel imports pose an enormous threat to Britain’s already ailing manufacturing industry, pushing up costs at a time when many are already in the jaws of an inflationary energy shock, Britain’s largest industry body has warned.
In a letter seen by CityAM, British Chambers of Commerce (BCC) boss Shevaun Haviland demanded an urgent meeting with business secretary Peter Kyle, warning tha incoming duties on foreign-produced steel will cause “immediate hardship” for importers when they come into force in July.
“The revised quotas and tariffs have the potential to create significant financial and logistical problems for downstream sectors using steel… including construction, engineering and carmaking,” Haviland wrote, accusing the government of looking as if it favoured “domestic primary production companies” over so-called ‘downstream’ firms that use imported steel in their manufacturing.
In July, the government will slash the quota of tariff-free steel imports by an average of 60 per cent, and double the import duty on all steel beyond that to 50 per cent. Ministers argue the move, which will see the quota on some steel products reduced by as much as 90 per cent, will help shore up Britain’s moribund steel industry, which has been floundering under the country’s sky-high energy costs and a ramping up of trade barriers by governments of popular export destinations.
Steel tariff tit for tat
Both the United States and European Union have dramatically ramped up tariffs on steel in the past year to safeguard their domestic industries. Donald Trump introduced the steel duties as part of his first wave of tariffs last year, while the EU’s response will come into force in July.
The UK’s response brings Britain’s policy in line with the US and Europe, albeit the reduction in the UK’s tariff-free quota is steeper than that being introduced by the EU. But British manufacturers, including carmakers and construction companies, have warned the move risks piling on costs to a sector of the economy that is already under fire.
Haviland, whose intervention was first reported by The Financial Times, urged the business department to extend the transition period to cover a full year. Doing so would better accommodate for “the timelines of steel supply and sourcing chains and commercial contracts”, she said.
She also called on Kyle to reconsider the more extreme quota reductions, which for some types of steel will see the amount companies are able to import slashed by 90 per cent. Both moves would “help avoid hardship to many firms otherwise negatively impacted by the new quota/tariff regime”, the industry chief wrote.
The intervention comes just days after Prime Minister Keir Starmer confirmed plans to return British Steel to public ownership for the first time in decades. The government took control of the struggling steelmaker last year, after negotiations between ministers and its Chinese owner Jingye juddered to a halt, sparking fears the plant’s last remaining coal-fired furnace would be extinguished.
Both the tariffs and British Steel’s nationalisation form part of a broader steel strategy unveiled by the government in March, which laid out plans to boost domestic production so that half of all UK demand could be met by UK steelmakers.
But Haviland warned that ratcheting up trade barriers would harm many of her industry body’s members, and push some toward less sustainable producers to keep down costs.
A government spokesman said: “The new steel trade measure aims to strike the right balance between protecting UK steel production and maintaining secure supply for the whole UK.
“We continue to take feedback from industry as we implement the measure, and we will conduct a review after 12 months to ensure it remains effective.”