EU Steel Tariff Increase Poses 'Biggest Ever Crisis' for UK Industry

The UK's steel sector has stated that the EU's proposals to increase tariffs on imported steel might be “perhaps the biggest crisis” it has ever faced. The commission plans to reduce steel imports into the bloc by 50% and impose new tariffs of 50%.

The EU, receiving 78% of UK steel exports worth nearly £3 billion, faces pressure from member states and their steel industries to address competition from low-cost imports, particularly from China and Turkey.

Navigating Challenges in the Steel Industry

The EU is proposing a 47% reduction in tariff-free quotas for imports, decreasing them to 18.3 million tonnes annually from 2024 levels.

Stéphane Séjourné executive vice president for prosperity and industrial strategy at the European Commission, announced that new measures addressing global overcapacity, unfair competition, state aid, and price undercutting will begin early next year, subject to approval from the European Parliament and most EU member states.

Eighteen thousand jobs were lost in the steel sector in 2024, prompting a call for intervention, as he stated during a news conference at the European Parliament in Strasbourg.

The UK steel industry faces further difficulties as a proposed deal to remove tariffs on UK steel exports to the US has been indefinitely postponed. Many firms were already struggling financially.

The UK government has taken control of Chinese-owned steel plants in Scunthorpe and Liberty Steel plants in Rotherham and Stocksbridge. The Prime Minister expressed strong support for the British steel industry amid EU tariff challenges. Sir Keir Starmer mentioned ongoing discussions about potential exemptions but did not provide further details.

Gareth Stace, director general of UK Steel, stressed the necessity of the government fully leveraging its trading relationship with the EU to secure UK country quotas, warning that failure to do so could result in disaster.

US Tariff Rises: A Spark for Global Reaction

The European Union's actions are partly a reaction to US President Donald Trump's significant tariff hikes on foreign steel, motivated by concerns regarding China. Similarly, Canada, Mexico, and Brazil have enhanced protections for their domestic steel industries, fearing that these businesses may suffer in the US while contending with heightened competition from imports shifting from America.

Notably, Mr. Stace warned that EU measures could redirect millions of tonnes of steel to the UK, posing a “terminal” risk for many steel companies. The Community Union, which represents UK steelworkers, labelled these measures as an “existential threat” to the industry.

European trade commissioner Maros Sefcovic indicated a willingness to "fully engage" with the UK regarding trade concerns, hinting at possible negotiations for a specific UK quota. The Department for Business is seeking urgent clarification from the European Commission about the implications of this development on the UK.

Industry Minister Chris McDonald stressed the need to protect UK-EU trade while working with allies on global issues. He reaffirmed the government's dedication to the steel sector, mentioning secured preferential access to the US market and efforts to enhance trade protections for UK steel producers against unfair practices.

The government will hold a meeting with steel industry representatives to address their concerns. Additionally, Kathleen Van Brempt, vice-chair of the European Parliament's global trade committee, expressed her intention to support the UK, referring to it as a close ally.

A Major Setback

Liam Bates, managing director at Marcegaglia, characterised recent developments as a significant setback for the company, emphasising the urgent need for clarity on government efforts to address these challenges related to trade reciprocity with Europe.

He voiced concerns about future trade with EU customers, highlighting potential strains from existing quotas and stressing the importance of maintaining long-term customer relationships despite these challenges.

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