The UK steel industry faces fresh uncertainty as the United States prepares to impose a 25% tariff on steel and aluminium imports, a move that could have far-reaching economic consequences for both nations. UK Business Secretary Jonathan Reynolds has warned that such tariffs would be detrimental not only to Britain but also to American industries reliant on specialised UK steel.
The tariffs, set to take effect in March under President Donald Trump’s administration, have been announced without exemptions, sparking concerns over trade relations between the two allies. While the UK is not a major steel supplier to the US, accounting for roughly 10% of British steel exports, industry leaders fear the ripple effects could destabilise domestic production.
Why the UK Seeks an Exemption
Speaking to the BBC, Reynolds highlighted Britain’s unique trading position, arguing that the UK supplies specialised steel products crucial to US industries, such as submarine casings manufactured in Sheffield. He stressed that tariffs could increase costs for American taxpayers and urged for an exemption.
“We have a mutual interest in negotiating a solution,” Reynolds stated, revealing that discussions with key Trump administration figures, including the US special envoy to the UK, had taken place. However, he acknowledged the challenges ahead, noting that the US has signalled a firm stance on enforcing the tariffs without exceptions.
The Fallout for British Steel
Industry representatives have described the tariffs as a potential “devastating blow” to the £400 million annual UK-US steel trade. UK Steel, the industry’s trade association, warned that beyond limiting exports to the US, the tariffs could lead to excess steel being “dumped” in the UK market. If countries that can no longer sell to the US divert their steel to Britain at lower prices, UK manufacturers risk being undercut.
Shadow Business Secretary Andrew Griffith criticised the government for failing to address this looming threat sooner. “The uncertainty surrounding US tariffs is something the government should have been proactively tackling, given our close trading ties,” he remarked.
Government Steps Up Support for the Steel Sector
In response to the industry’s challenges, the UK government has pledged up to £2.5 billion in support for domestic steel producers. The funding aims to modernise production, secure jobs, and address structural challenges that have plagued the sector for years.
A consultation process has also been launched under the Plan for Steel, focusing on long-term solutions such as:
- Expanding UK steel production
- Promoting the use of domestic steel in public infrastructure projects
- Enhancing scrap processing capabilities
- Investing in electric arc furnaces, which are more energy-efficient and environmentally sustainable than traditional blast furnaces
Electric arc furnaces are a key part of the UK’s steel transition strategy. The shift away from carbon-intensive blast furnaces, while necessary for reducing emissions, has raised concerns over job losses. In Port Talbot, Wales, Tata Steel’s recent decision to replace blast furnaces with electric arc furnaces led to 2,800 job cuts. British Steel’s plans to phase out blast furnaces in Scunthorpe could put a further 2,000 jobs at risk.
Reynolds acknowledged that workforce reductions were inevitable but insisted that modernisation could create new opportunities if domestic demand for steel increased.
Retaliation or Diplomacy?
Unlike the EU, which has hinted at retaliatory tariffs against the US, the UK government has so far refrained from taking an aggressive stance. However, Liberal Democrat Deputy Leader Daisy Cooper has urged immediate preparations for countermeasures, warning that the UK steel sector is “dangerously exposed” to the damage Trump’s tariffs could inflict.
With global trade tensions on the rise, industry experts stress the need for a robust steel strategy that safeguards British production while ensuring fair market conditions. Gareth Stace, Director-General of UK Steel, has called for clear government policies to prevent further decline, stating, “A well-structured strategy has the power to reverse the sector’s downturn, particularly as competition from foreign imports grows.”
As the UK steel industry navigates a rapidly shifting landscape, the coming months will be critical. Whether Britain can negotiate an exemption or will be forced to contend with the tariffs remains uncertain. One thing, however, is clear—without decisive action, British steelmakers face an uphill battle to maintain their competitiveness on the global stage.
