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The UK is to throw a tariff cordon around its steel industry in a bid to protect British steelmakers from a glut of Chinese steel, ministers have announced.
In a move hailed by the steel industry as a fundamental shift in the British government’s approach to trade policy, the UK will slash import quotas for tariff-free steel by 60 per cent from July, while imposing a 50 per cent tariff on imports above these levels.
The new rates bring the UK broadly into line with the US, the EU and Canada, which have all taken similar measures over the past year to defend their steelmaking industries from unfair global competition.
Peter Kyle, business secretary, said the new tariffs were designed to protect a sector that was a cornerstone in the government’s industrial policy.
“We are closing the decades-long chapter of destructive deindustrialisation and committing instead to strengthening and sustaining Britain as a steelmaking nation,” he said.
UK Steel, the steelmakers lobby group, described the move as “a transformation” in policy towards the sector, which has seen their share of the UK market slump to just 30 per cent in the face of global competition.
“The government’s bravery in taking the required measures represents a real shift in the culture of Westminster from protecting the ideology of free trade at any cost, to defending critical industries and national security,” added UK Steel director-general Gareth Stace.
However, while the steel industry celebrated, others warned that higher tariffs risked hitting manufacturing industries that import steel.
William Bain, head of trade policy at the British Chambers of Commerce, said the move sounded the death knell for the era of ever-lower tariffs on manufactured goods and risked leaving manufacturers that relied on imports “feeling the pinch”.
China produces around 1bn tonnes of steel a year but has seen domestic demand fall sharply following a downturn in its property market, leading to a glut on world markets.
The British move followed an EU announcement last year that it would halve quotas and increase tariffs to 50 per cent on global imports. UK officials said the move was not designed as “retaliation” against the EU.
The tariffs and quotas are part of a broader new “steel strategy” aimed at rebuilding and decarbonising the industry for which Labour first promised £2.5bn of funding three years ago.
The strategy will reaffirm the Labour government’s commitment to electric arc furnaces, a cleaner type of steel production using recycled scrap.
Tata Steel, owner of the Port Talbot steelworks in south Wales, has already committed to building a £1.25bn electric arc furnace on the site of its now-closed blast furnaces.
The British government faces a conundrum over lossmaking British Steel, which it took control of over a year ago and is now subsidising at the cost of over £1.2mn a day.
Replacing British Steel’s two blast furnaces in Scunthorpe — the last ones in the country — with the greener alternative is likely to cost thousands of job losses at the site.
Separately China’s Jingye, which still owns British Steel, has demanded £1bn from the government as compensation for its investment in the business it bought out of insolvency in 2020, but ministers have only offered a sum under £100mn.
