EU tariffs leave UK steel industry facing ‘biggest threat ever’
The UK’s ailing steel sector is facing the “biggest crisis in its history”, industry chiefs have warned, after the European Union unveiled plans to double tariffs on all steel imports in a bid to revive its moribund steelmaking capacity.
As part of efforts to kickstart a “reindustrialisation of Europe“, EU commissioners signed off a proposal to slap 50 per cent tariffs on all steel imports into the 27-member trading bloc and slash its tariff-free import quotas on Wednesday.
The move – an attempt to shore up domestic production and protect its steelmakers from a flood of cheap Asian imports – amounts to one of the most radical shake-ups of European trade policy in recent history, and has left British steel producers reeling just months after Donald Trump targeted the sector with his own set of tariffs.
The bloc was the destination for some 1.9m tonnes of UK-made steel last year – equivalent to 78 per cent of all exports of the metal – leading the sector’s largest industry body to warn its members face “an existential threat” that could sound the death knell for a 200-year-old industry.
“This is perhaps the biggest crisis the UK steel industry has ever faced,” said Gareth Stace, director-general of UK Steel. “Government must go all out to leverage our trading relationship with the European Union to secure UK country quotas or potentially face disaster.”
Steel industry threatened by ‘flood of imports’
The fresh tariffs are just the latest in a string of body blows to afflict Britain’s largest steelmakers, which have been forced simultaneously to contend with the UK’s sky-high energy prices and an increasingly protectionist trade environment.
Britain has the most expensive industrial energy of any major economy, a fact that has left steelmaking and many of the country’s most energy-intensive sectors on the brink. The industry has also found itself in the crosshairs of the US’s own tariff blitz, which saw a similar 50 per cent levy slapped on all American steel imports in May.
The confluence of headwinds was partly responsible for the government having to take control of British Steel in April. And despite hopes the government will secure a carve-out from the US’s set of tariffs, any exemption would not assuage fears the UK will be flooded with cheaper Asian exports originally intended for America.
The EU’s restrictions have compounded those fears that cheaply produced Asian steel will be rerouted to Britain.
“The UK Government must now recognise the urgent need to put in place its own measures to defend against a flood of imports,” Stace added. “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.”
UK ‘pushing EU for clarification’
Under the changes tabled by EU commissioners, not only would the levy paid by UK steel exporters double from 25 per cent, but the tariff-free quota is also poised to be slashed to 18m tonnes; a 44 per cent reduction.
Industry minister Chris McDonald said: “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.
“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.”