Britain’s beleaguered steel sector is confronting an existential threat after the European Commission announced plans to double import tariffs to 50 per cent, in a move that could prove even more catastrophic than Donald Trump’s trade war.
The drastic measures, unveiled today, threaten to devastate an industry already reeling from cheap Chinese competition, soaring energy costs and political turmoil. With Europe accounting for more than three quarters of the UK’s steel exports, compared to just 7 per cent for the United States, the EU tariff hike represents a hammer blow to British steelmakers.
Gareth Stace, director general of industry body UK Steel, delivered a stark warning about the scale of the threat. “This is perhaps the biggest crisis the UK steel industry has ever faced,” he said. The Government must go all out to leverage our trading relationship with the European Union to secure UK country quotas, or potentially face disaster.
Brussels acts to stem flood of cheap imports
The European Commission is implementing the tariff increase to combat a deluge of cheap steel flooding into the bloc from countries including China and Turkey. The problem has intensified as Mr Trump’s tariffs divert vast quantities of steel that would previously have been sold to America towards European markets instead.
Under current post-Brexit arrangements, Britain can sell steel to the EU tariff-free up to a specific quota level. Once that threshold is exceeded, tariffs of 25 per cent currently apply. However, Brussels now plans to dramatically reduce those quotas, meaning UK exports are far more likely to be caught by charges. The tariff rate will simultaneously be doubled to 50 per cent.
The proposals also include a “melt and pour” origin requirement, forcing importers to provide evidence showing where steel was originally melted and poured, preventing circumvention of the tariffs.
UK exports face hammer blow
Last year, 78 per cent of the UK’s steel exports, totalling 1.9 million tonnes, was sold to the EU, making it by far Britain’s largest market for the metal. The proposed changes threaten to close off this vital trading relationship just as the industry battles multiple crises simultaneously.
Mr Stace warned the Government “must go all out” to secure a deal for the UK steel sector “or potentially face disaster.” He added that Britain must now implement its own defensive measures against cheap imports being redirected towards UK shores.
“The probability of the EU’s measures redirecting millions of tonnes of steel towards the UK could be terminal for many of our remaining steel companies,” he said.
Speaking to Times Radio this evening, Mr Stace elaborated on the dire consequences: “If the UK Government can’t get round the table with the EU and convince the EU that we’re their friend, not their enemy, and then carve out a reasonable quota for UK exports into the EU, then we will see job losses in our sector the like we haven’t seen for a number of years. Therefore now is the time for Government at the very senior levels talking to the EU to get a deal for the UK steel sector.”
Unions warn of existential threat
Alasdair McDiarmid, assistant general secretary at steelworkers’ union Community, described the situation in equally grave terms. “The new measures proposed by the EU represent an existential threat to our industry, as well as the thousands of jobs and communities it supports right across the country,” he said.
“We know that ministers will be acutely aware of the grave risks the EU’s proposal poses. It is vital that the Government moves swiftly to negotiate preferential treatment for the UK, including through country-specific quotas.”
Charlotte Brumpton-Childs from the GMB union branded the measures a “hammer blow” to British steel. “This could be the end of steel-making in UK if proper safeguards aren’t secured,” she warned.
Industry already on its knees
The announcement represents another crisis for a sector that has endured relentless pressure in recent years. The turmoil has already prompted the Government to bail out Tata Steel’s Port Talbot plant in South Wales and take Scunthorpe-based British Steel into public control.
The timing is particularly bitter given Sir Keir Starmer’s recent attempts to “reset” relations with Brussels by making major concessions in areas including fishing rights and youth migration. Industry insiders hope the announcement will prove a starting point for negotiations and that Britain will be able to achieve a carve-out, but it represents yet another period of crippling uncertainty.
Ripple effects across economy
Emily Sawicz, senior analyst at accountancy firm RSM UK, warned the renewed uncertainty “will create a ripple effect across other industries including construction, automotive, real estate and energy, all of which rely on stable supply chains and access to raw materials.”
She added: “Manufacturers have already weathered the storm of US tariffs, but given the value of UK steel exports to the EU market, this will have a far greater impact. The sector is already grappling with energy costs that are roughly 50 per cent higher than EU averages, whilst continuing to face competition from Chinese exports flooding the global market. Without guaranteed access to the EU and robust domestic protections, UK steelmakers risk becoming uncompetitive in an industry that is increasingly reliant on Government support.”
Government scrambles for response
Chris McDonald, the Government’s industry minister, is set to meet with steel representatives on Thursday. He attempted to strike a defiant tone, stating: “We will always defend our critical steel industry, which is why we are pushing the European Commission for urgent clarification of the impact of this move on the UK.”
He added: “It’s vital we protect trade flows between the UK and EU and we will work with our closest allies to address global challenges rather than adding to our industries’ woes. This Government has shown its commitment to our steel industry by securing preferential access to the US market for our exporters, and we continue to explore stronger trade measures to protect UK steel producers from unfair behaviours.”
Opposition attacks Government’s steel strategy
Conservative shadow business secretary Andrew Griffith launched a scathing attack on Labour’s handling of the steel crisis. “The Government’s lack of a real plan for steel is unravelling fast,” he said. “From the dead-on-arrival zero US steel tariff to this significant new threat from the EU, it’s clear ministers are flailing as the industry threatens to collapse around them.”
The crisis threatens to undermine Britain’s industrial base at a time when the Government has pledged to rebuild manufacturing capacity and create high-quality jobs across traditional industrial heartlands. With the EU expected to formally unveil the proposals next week, the clock is ticking for ministers to secure a lifeline for one of Britain’s most strategically important industries.
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