The UK steel industry is facing significant uncertainty amidst news that the US Government has enacted a deal that will allow the trade of EU-produced metals into the US without the levying of tariffs or duties.
The agreement was reached in October 2021 and the UK attempted to negotiate a similar deal but talks failed.
The deal will reduce competitiveness of UK steel
As EU steel and other metals will now be exempt from tax and duties when importing from the US, the exporting of steel from the UK to the US will prove much more costly and will likely result in significantly reduced demand for UK steel in the US.
Additionally, the trade agreement between the EU and the US increases the cost of importing UK steel to the EU due to a clause within the agreement. This will further diminish the attractiveness of UK steel in the global marketplace.
Trump’s tariffs were greatly detrimental to the UK
Former President Donald Trump was renowned for his extensive use of tariffs in international trade as a method of protecting jobs. The director-general of UK Steel Gareth Stace claimed UK steel exports to the US have been cut in half since President Trump introduced steel tariffs in 2018.
Evidently, protectionist measures in the US significantly harmed demand for UK steel. Additionally, Stace expressed concern over the lack of trade deal between the US and the UK, which means the UK’s ‘export position will only deteriorate further.’
A government spokesperson said: “We recognise the vital role the steel sector plays in our [UK] economy and our priority is to resolve this dispute to the benefit of workers on both sides of the Atlantic.”
Concerns have also been raised over steel used for HS2
Unite, the largest steel union in the UK, has expressed discontent with the lack of transparency in the current HS2 plans over where the steel used in the project will originate.
Coupled with rising energy costs and reduced competitiveness of steel due to tariffs and duties, Unite claims that UK steel is in danger of becoming uneconomic and may result in widespread business closures. The steel industry currently employs 33,000 people across 1,100 businesses throughout the UK. Unite general secretary Sharon Graham said: “UK producers should have a paramount place in producing steel for the project.”
Concerns over HS2’s steel procurement combined with the US-EU trade deal has noticeably reduced certainty, which may create further economic restrictions through lower business and investor confidence within the UK steel industry.