UK and EU impose steel tariffs to counter cheap imports

From July, the UK will lower the tariff-free quota level for steel imports by 60% compared with current arrangements. The EU is to go ahead with plans to double tariffs and halve quotas on imports of steel from July, with its decision reducing duty-free quotas by 47%. The UK has announced higher tariffs of 50% and a larger quota cut than the EU's 47% reduction. The EU has agreed to double tariffs on foreign steel to shield the union's industry against global overproduction, with additional imports facing a 50% tariff, double the previous rate. These moves bring the UK in line with recent actions by the US, EU, and Canada in response to cheap imports from China.

The EU agreed trade restrictions on steel imports in response to a glut of artificially cheap Chinese imports. Cheap steel from China, India, and Turkey has put pressure on European producers. The new rules will apply to imported products from all countries except EEA countries Iceland, Liechtenstein, and Norway. The EU's new steel tariffs are intended to save jobs in the steel industry. The levies are expected to save companies like Tata and British Steel from collapse.

The UK changes aim to ensure the UK steel sector's future in the face of global overcapacity and benefit thousands of steelworkers. The steel sector employs about 10,000 people and has suffered decades of job losses. The government's ambition is to boost domestic steel production to meet up to 50% of domestic demand. The National Wealth Fund will provide up to £2.5 billion of financing for investment in the steel sector this Parliament. The government has taken decisive steps to support the steel industry since 2024, according to Roy Rickhuss.

The strategy confirms electric arc furnaces (EAF) as the future of British steelmaking, continuing the shift from blast furnaces. The shift to EAF has led to job losses in steel plants including Port Talbot. British Steel employs 3,500 people at its plant in Scunthorpe. This technological transition is part of a broader industrial restructuring that has significant employment implications.

Officials are on track to fully nationalise British Steel within weeks. Ministers offered £100m to Jingye for British Steel earlier this month but were rebuffed; Jingye had originally demanded more than £1bn. By the end of January, the cost of keeping British Steel running had ballooned to £377m, and could exceed £1.5bn by 2028. Jingye said the Scunthorpe plant was losing £700,000 a day when it announced plans to close in March 2025. The sector strongly welcomes the nationalisation of British Steel, according to Gareth Stace.

Steel bosses have warned ministers that a 'back door' in new trade rules could hit British manufacturers by allowing pre-made steel parts to enter tax-free. The loophole means pre-made steel parts like bridge sections, columns, door frames, rods, and tubes will escape recently announced import tariffs. Industry bosses say the measures target imports of metal straight from the furnace but leave pre-made products untouched. Chris Bryant was warned about the loophole in meetings with industry bosses hours after launching the steel strategy on 19 March. The rules allow foreign pre-made steel in via a 'back door', according to Simon Boyd.

Downing Street hopes to secure deals on steel and electric cars with the EU to upgrade the post-Brexit economic relationship. The UK wants agreements on steel and electric vehicles to avoid British industry being disadvantaged by scheduled changes to trade rules. The UK is not the target of the EU's steel tariffs but will be hurt by them, as they come into force on 1 July. The EU measures are designed to curb Chinese imports but could damage UK exports to the bloc. The EU is the UK's largest market, with 1.8m tonnes of exports a year or 10% of the new quota.

Stricter trade rules for electric cars are due to come into force in 2027. In 2023, UK and EU carmakers were given three years to meet more demanding local-content requirements for EVs to qualify for zero tariffs. A move to higher local-content requirements for EVs was delayed until 2027 after industry requests. Steel and EVs 'have to be a matter of discussion this year' due to the context, according to Nick Thomas-Symonds, a Cabinet Office minister.

The tariffs will raise the cost of steel, crucial for infrastructure projects like HS2, amid energy shock from the Iran war. Transport secretary Heidi Alexander is due to update the Commons on Labour's drive to 'reset' the cost of HS2. HS2 is already expected to cost about £100bn when accounting for inflation. Contractors are being told to look for opportunities to buy steel in advance for elements like stations to mitigate future price increases. Tariffs on imported steel are hitting infrastructure projects with a cost shock, according to Milda Manomaityte.

British drug exports to the US will escape tariffs imposed by Donald Trump as part of a UK-US medicines deal. The deal will give patients in Britain greater access to potentially life-extending drugs by allowing the NHS to pay more for treatments. Nice has increased the amount the NHS can spend on a treatment from £30,000 to £35,000 a year. The deal will let £5bn of British-made drugs sold to the US avoid tariffs of up to 100%. The UK government described the deal as 'a win for British patients, British businesses and the British economy' in an official statement.

The UK government has committed to doubling its spending on newly developed medicines from 0.3% of GDP to 0.6% of GDP by 2035. Dr Andrew Hill estimated the jump in spending will cost the UK £9bn a year by 2035. This pharmaceutical investment represents a parallel trade strategy to the steel measures, focusing on securing market access and supporting domestic industry.

Ministers moved to designate the steel industry as vital to national security last week. The wider network of downstream manufacturers that turn steel into finished products supports 300,000 jobs. This designation underscores the strategic importance of maintaining domestic steel production capacity beyond immediate economic considerations.

The EU decision will reduce duty-free quotas by 47%. The new measures will cap imports of steel in the EU to 18.7m tonnes a year. There is a discrepancy regarding the precise EU import limits, with some reports indicating the annual tariff-free import quota will be limited to 18.3 million tonnes, about 47% less than before. This uncertainty affects the precise understanding of the scale of trade restrictions and their impact on markets.

The United Kingdom has announced plans to remove its £135 de minimis customs duty exemption. The UK de minimis threshold will remain in place through at least December 31, 2026, with full removal expected by March 2029 at the latest. The United States has moved to effectively eliminate its $800 de minimis exemption for many shipments in August 2025, and effective August 29, 2025, all commercial shipments into the U.S. regardless of value became subject to formal customs entry and duty assessment. The European Union has confirmed plans to remove its €150 customs duty exemption as part of a broader customs reform agenda in 2028, with temporary measures starting as early as 2026, and the plan reached political agreement in late 2025.

A UK minister has rejected that new UK trade measures on steel are reminiscent of US President Donald Trump's tariffs. The measures are 'not very Donald Trump' and are specific to ensure fair trade against artificially low prices, according to Sir Chris Bryant, the Trade minister. Without action, the UK's steelmaking capability faces 'real jeopardy', leaving the country reliant on overseas suppliers, said Peter Kyle, the Business and Trade Secretary. The EU has taken note of the UK's desire for closer alignment and is exploring what can be done, according to Maroš Šefčovič, an EU commissioner.

Several key unknowns remain regarding the implementation and impact of these measures. It is unclear whether the UK and EU will reach an agreement on steel and electric vehicle trade to mitigate the impact of new tariffs. The UK government has not detailed how it plans to address the alleged loophole allowing pre-made steel parts to enter tax-free. The exact timeline and conditions for the full nationalisation of British Steel have not been confirmed. The specific impact of the steel tariffs on the cost and timeline of major infrastructure projects like HS2 remains to be seen. How the removal of de minimis customs duty exemptions in the UK, US, and EU will affect global e-commerce and small businesses is also uncertain.