Ministers have announced that the UK will implement a tariff cordon around its steel industry to protect British steelmakers from a glut of Chinese steel. This move, hailed by the steel industry as a fundamental shift in the government’s trade policy, involves slashing import quotas for tariff-free steel by 60% from July and imposing a 50% tariff on imports exceeding these levels.
Peter Kyle explained that the new tariffs are intended to safeguard a sector crucial to the government’s industrial policy. He emphasised closing the decades-long chapter of destructive deindustrialisation and committing instead to bolstering and sustaining Britain’s steelmaking legacy.
To no surprise UK Steel, the steelmakers’ lobby group, characterised this shift as a “transformation” in policy towards the sector. This sector’s share of the UK market has plummeted to just 30% due to global competition and expensive pricing.
UK Steel director-general Gareth Stace praised the government’s courage in taking necessary action, highlighting a real change in Westminster’s culture from prioritising free trade at all costs to defending vital industries and national security.
While the steel industry celebrated, others cautioned that higher tariffs could negatively impact manufacturing industries reliant on imported steel. William Bain, head of trade policy at the British Chambers of Commerce, warned that this move signalled the end of ever-lower tariffs on manufactured goods and risked leaving manufacturers reliant on imports feeling the financial strain.
China, a major steel producer, generates approximately 1 billion tonnes annually but has experienced a sharp decline in domestic demand following a downturn in its property market. This has resulted in a glut on global steel markets. The British decision followed an EU announcement last year that it would halve quotas and raise tariffs to 50% on global imports. UK officials clarified that this move wasn’t intended as retaliation against the EU. These tariffs and quotas are part of a broader new “steel strategy” aimed at revitalising and decarbonising the industry. Labour first pledged £2.5bn of funding for this strategy three years ago. The strategy will reaffirm the Labour government’s commitment to electric arc furnaces, a cleaner type of steel production utilising recycled scrap.
Business and Trade Secretary Peter Kyle gave details of the strategy on a visit to Tata Steel’s plant in Port Talbot, South Wales, warning that without action, the UK’s steelmaking capability faces “real jeopardy”, leaving the country reliant on overseas suppliers for materials essential to energy security, defence and transport infrastructure.
Mr Kyle said: “Making steel in the UK is vital for national security, critical infrastructure and the wider economy.
“Steel-making is a cornerstone of our modern industrial policy that deliberately focuses support for key industries, technologies, and strategically important sectors.
“With this strategy we are closing the decades-long chapter of destructive de-industrialisation and committing instead to strengthening and sustaining Britain as a steel-making nation.”
