New UK steel tariffs threaten British manufacturing, industry warns

SEATTLE (Scrap Monster): New protections for the U.K. steel sector will fuel inflation and threaten thousands of jobs throughout the manufacturing sector, metal importers are warning the British government.

The protections “risk severely disrupting supply chains” serving Britain’s automotive, construction, infrastructure and engineering sectors, Confederation of British Metalforming President Stephen Morley said in a letter to Trade Minister Chris Bryant, shared with POLITICO.

Ministers announced last month that the government is slashing quotas on steel imports by 60 percent, with tariffs outside the caps rising to 50 percent as part of the new strategy to protect British steelmakers from a glut of cheap Chinese exports.

The aim is to boost homegrown steelmakers’ production to meet half of domestic demand, serving strategically significant sectors such as defense, infrastructure and clean energy. The government set out details of the new quotas on 20 steel products, which take effect on July 1, ahead of the April Easter holiday weekend.

“We were assured that steel products not made in the UK would be excluded from quotas,” Morley told Bryant in the letter dated April 9, calling the government’s moves “reckless” and arguing the new protections “could lead to critical material shortages for some industry sectors.”

“With the utmost respect, I don’t think you will be in office when the long-term impact of this decision is played out and the devastating impact will be felt on steel importers, stockholders and downstream processors and manufacturers,” Morley said. The CBM represents 200 firms that employ about 40,000 people in the U.K.

The new quotas will lead to “much higher costs for UK manufacturers,” he added, with these potentially being passed on to consumers.

As steel importers brace for the new measures, “we have companies saying their customers will now be importing finished goods directly, rather than buying processed or manufactured material in the UK,” Morley warned.

He fears that this “will start to kill off” British firms that import and process steel to supply U.K. manufacturing, leading to job losses. “As lower cost imports are replaced with higher cost steel from UK producers. We are worried that this is not market sustainable," he wrote.

A U.K. government spokesperson said: “The whole aim of our robust new measure is that it will protect UK steel production from artificially low global prices and will apply to all products that can be made in the UK. It will help us to produce up to 50% of our domestic demand and leave us less reliant on steel made overseas.”

“We have engaged extensively with the whole of industry — both producers and downstream users — when developing this measure and continue to do so,” the spokesperson added. “We will review it after 12 months to ensure the balance remains right for both producers and downstream industries.”

The U.K. government’s efforts to shield Britain’s steelmakers come after the industry was  named a "Strategic National Asset," critical for national security last month. Government departments have been told to use U.K.-produced steel in public contracts or set out a clear justification for sourcing overseas.

The British government is also working with the European Union and the United States to create a Western steel alliance to counter China's steel overcapacity, EU Trade Commissioner Maroš Šefčovič said late last month.

President Donald Trump imposed 50 percent tariffs on steel imports to the U.S. last June, with U.K. exports getting a 25 percent tariff carved out as part of a trade pact. Brussels is also slashing its quotas with a 50 percent duty outside those caps as part of the effort to raise barriers in the West.

Courtesy: www.politico.eu