UK Steel Industry Faces Uncertain Future as Retaliatory Measures Escalate

Concerns for UK Steel

The trade war initiated by Donald Trump continues to escalate, with nations implementing retaliatory measures against his global blanket tariff on steel and aluminum imports to the US. The European Union's decision to impose tariffs on €26 billion worth of US goods, including a 50% levy on whiskey, has been met with a threat from the US president to impose a massive 200% levy on all alcohol coming from the bloc. Meanwhile, Canada has announced tariffs on nearly C$30 billion of US products.

This situation began when Trump placed 25% tariffs on steel and aluminum from all countries earlier this week. This blanket measure includes all European nations, including the UK. This ends Trump's previous ambiguity on whether to include the UK in his tariff drive, reaching the decision that no nation should be spared.

The tariffs raise the flat duty on steel and aluminum entering America to 25%. This could affect UK products worth hundreds of millions of pounds, as products like cars, cans, and tin foil are likely to become more expensive.

The UK government has not followed the European Union in imposing retaliatory trade tariffs on the US, instead focusing on attempting to secure an exemption. However, it appears that the prime minister's diplomatic approach to the new US administration has fallen on deaf ears, as the UK receives no exemption from the blanket tariff expansion.

The steel industry in the UK is already struggling due to excess capacity in the global market pushing prices down. This large-scale production is largely coming from China, which is partly motivating Trump to place even higher tariffs on the country's steel at a massive 45%.

Industry figures in the UK have already begun to disagree with the Labour's reaction, calling on the government to act. Gareth Stace, the director-general of trade association UK Steel, branded the Trump administration's move "hugely disappointing," and urged the government to take "decisive action" to protect the industry.

The US is the steel industry's second-largest export market behind the European Union. UK Steel says that in 2024 the UK exported 180,000 tonnes of semi-finished and finished steel to the US, worth £370 million, some 7% of the UK's total steel exports by volume and 9% by value.

"These US tariffs on UK steel exports are hugely damaging and they threaten jobs."

While the UK has not been threatened directly with the 200% levy on alcohol, such a measure being imposed on the EU could certainly have a knock-on effect on prices in Britain.