The UK and US are working towards negotiating an exemption for the UK from President Donald Trump’s proposed 25% tariffs on steel exports, according to Business Secretary Jonathan Reynolds. The tariffs, expected to take effect in March, could have significant economic consequences for both countries.
Speaking to the BBC, Reynolds emphasized the negative impact such tariffs would have, stating, “The economic consequences would be harmful not only to the UK but also to the US.” He pointed out that the UK occupies a unique trade position and supplies highly specialized steel and aluminum products, including submarine casings produced in Sheffield. He warned that imposing tariffs would only drive up costs for American taxpayers.
Reynolds’ remarks on the Sunday with Laura Kuenssberg program followed the UK government’s announcement of a £2.5bn investment in the domestic steel industry. Despite Trump’s assertion that no exceptions or exemptions would be granted, the UK remains hopeful for a negotiated resolution.
The discussion also touched on the uncertain future of 2,000 jobs at British Steel’s Scunthorpe plant, where plans are in place to shut down blast furnaces. Reynolds acknowledged the government’s financial commitment to the industry but conceded that a “reduction in headcount” was inevitable.
As part of its support strategy, the government has launched a consultation on its Plan for Steel, designed to tackle long-term challenges in the industry. The plan includes measures aimed at reducing production costs and increasing the use of UK-produced steel in major infrastructure projects.
President Trump’s planned tariffs have raised concerns within the UK steel sector, which fears losing millions in trade revenue. Shadow Business Secretary Andrew Griffith criticized the government for its lack of action, stating that the industry needs clear communication and engagement with the US.
The government’s Plan for Steel outlines several key initiatives, including:
- Expanding steel production capabilities
- Promoting UK-manufactured steel in public infrastructure projects
- Enhancing scrap processing facilities
- Investing in energy-efficient electric arc furnaces as an alternative to high-carbon blast furnaces
The consultation will also explore ways to reduce electricity costs for steel manufacturers, making UK steel more competitive globally, and investigate measures to shield the sector from unfair foreign competition, such as the influx of cheap imports.
Although the government has not committed to reducing energy bills as part of its plan, it has confirmed that it will not retaliate immediately against the US tariffs.
The UK steel industry contributes approximately £400m annually to UK-US trade. While the US accounts for only around 10% of British steel exports, the sector fears the tariffs could result in an oversupply of steel in the UK market as other exporting nations seek alternative buyers, potentially driving prices down and harming domestic producers.
The financial support provided by the government could particularly benefit key steel-producing areas, including Scotland, Scunthorpe in Lincolnshire, Rotherham in South Yorkshire, and Redcar in North Yorkshire, the Department for Business and Trade (DBT) stated.
The National Wealth Fund, a joint initiative between the government, private sector, and local authorities, will help finance steel and infrastructure projects. The DBT emphasized its commitment to supporting the steel industry, highlighting the expansion of Heathrow Airport as an example of a project requiring 400,000 tonnes of UK-produced steel.
The UK steel sector has suffered significant job losses in recent years. Tata Steel is transitioning to electric arc furnaces at its Port Talbot site in Wales, resulting in 2,800 job cuts. British Steel announced in 2023 that it would shut down blast furnaces in Scunthorpe and replace them with electric arc technology, leading to an estimated 3,000 job losses.
The GMB union welcomed the government’s intervention, describing the funding as “desperately needed” after years of inaction. “As global instability increases, maintaining a strong domestic steel industry is essential for economic and national security,” said Andy Prendergast, the union’s national secretary.
Gareth Stace, director-general of UK Steel, called the government’s commitment “vital and welcome,” emphasizing that the consultation would inform a new steel strategy set for release in the spring. He noted that a strong strategy could help reverse the sector’s decline amid growing competition from international imports.
Andrew Griffiths, while welcoming the government’s proposals, stressed the importance of addressing energy costs, which he described as placing “an intolerable strain on UK steelmakers.”
