Trump’s Proposed 25% Tariffs on Steel and Aluminium Imports
President Trump has announced that he plans to impose an additional 25% tariff on steel and aluminium imports into the US, adding to the existing tariffs under Section 232. This latest move leaves significant uncertainty over how it will affect existing agreements with countries such as the UK, which has been previously granted exemptions or negotiated tariff-rate quotas for certain products. It remains unclear whether this new proposal will alter or cancel those previous arrangements.
Impact on UK Steel Exports to the US
The UK steel industry exports approximately 200,000 metric tons of steel annually to the US, valued at over £400 million. The UK provides high-quality steel products for critical sectors like defence, aerospace, and stainless steel manufacturing. The announcement has raised concerns among industry leaders about the potential consequences of the new tariffs, which could directly impact these exports.
Gareth Stace, Director General of UK Steel, stressed that the UK’s steel production is world-leading, and the US relies on these products in industries that are essential to its economy. Any new tariffs could undermine this vital trade relationship, which could result in serious economic losses for the UK steel sector.
Exemptions and Current Trade Arrangements Under Threat
Certain countries, including Canada and Mexico, were granted exemptions when the Section 232 tariffs were first introduced in 2018. Later, the UK, EU, and Japan negotiated a system of tariff-rate quotas. Under this system, companies could apply for exemptions to import steel products that were not manufactured in the US, without facing tariffs. However, the details of Trump's new proposal are still unclear, and it remains to be seen whether these exemptions will be overridden.
Trade Diversion and the Risk of Unfair Imports
A major concern with these new tariffs is the potential for global steel overcapacity, which could lead to a surge in steel exports from other countries to the UK. Countries that are barred from exporting to the US may redirect their steel to other markets, including the UK. Without strong protections, this could lead to unfairly priced imports, which would harm UK steelmakers by distorting competition and threatening the long-term viability of the industry.
Currently, the UK is partially shielded from this risk through existing Steel Safeguard measures, which are set to expire in June 2026. However, without these protections, the UK market could be flooded with cheap steel imports, further damaging the industry.
The Need for Strong UK Trade Measures Post-2026
The expiry of the Steel Safeguard measures in 2026 is a critical issue for the UK steel sector. Industry leaders have called for robust new trade measures to protect UK steelmakers from the potential impact of rising global protectionism. The UK Carbon Border Adjustment Mechanism (CBAM), which is a tax on high-emission steel imports, is set to be implemented in January 2027. However, some experts argue that accelerating this measure to 2026 could provide an additional layer of protection against unfairly priced imports.
The UK Steel Industry’s Vulnerability Amid Global Protectionism
The introduction of further US tariffs on UK steel exports would be a devastating blow to the UK steel industry, particularly given the current state of the global market. At a time when demand for steel is shrinking, and production costs are high, the rise in protectionism, particularly from the US, could significantly harm UK exports. The US remains the UK’s second-largest steel export market, and a new tariff would jeopardize the £400 million contribution that the sector makes to the UK’s balance of trade.
Concerns From Labour Leaders Over Jobs and Economic Impact
Alasdair McDiarmid, Assistant General Secretary of the Community Union, echoed the concerns of many in the industry, noting that the new tariffs could threaten jobs in the UK steel sector. He emphasized that such a move would also harm US industries that rely on UK steel products, particularly in defence and aerospace sectors. McDiarmid reiterated the need for stronger UK trade measures, especially as the global steel market faces rising protectionism.
The Path Forward: Urgent Action Needed
As uncertainty looms over the future of the UK steel industry in the wake of President Trump’s tariff announcement, industry leaders are calling for swift and decisive action from the UK government. They stress the importance of safeguarding the UK market from trade diversion and protecting steel producers from a surge in cheap imports following the expiry of existing safeguards. There is also a call for the UK government to accelerate the implementation of the Carbon Border Adjustment Mechanism, which could offer a crucial line of defence for UK steelmakers facing growing global competition.
In these challenging times, the UK’s steel sector is looking to its government to ensure that trade measures are in place to mitigate the risks posed by increasing global protectionism, including the potential impact of the new US tariffs.
