Britain’s beleaguered steel industry is facing an ‘existential threat’ after the European Union announced plans to hike tariffs on imports to 50 per cent.
The measure could be even more damaging than Donald Trump’s tariffs as Europe accounts for more than three quarters of the UK’s steel exports – compared to just 7 per cent for the US.
Gareth Stace, director general of industry body UK Steel, said: ‘This is perhaps the biggest crisis the UK steel industry has ever faced.’
The announcement comes despite Sir Keir Starmer’s attempt to ‘reset’ relations with Brussels by making major concessions in areas such as fishing and youth migration.
And it represents a bitter blow for an industry already reeling from a series of crises – from the threat of cheap Chinese steel to the pain of high energy prices and the chaos caused by Mr Trump’s trade war.
The turmoil has already prompted the Government to bail out Tata Steel’s Port Talbot plant in south Wales and take Scunthorpe-based British Steel into public control.
Brussels is acting to hike tariffs because of the flood of cheap steel imports from the likes of China and Turkey.
The problem has increased as Mr Trump’s tariffs mean vast quantities of steel that would previously have been sold to the US is being diverted to Europe.
But the EU’s decision to hike its own tariffs also threatens to have a devastating impact on Britain.
The announcement comes despite Sir Keir Starmer’s attempt to ‘reset’ relations with Brussels. The PM signed a deal in May with European Commission president Ursula von der Leyen
The measure could be even more damaging than Donald Trump’s tariffs as Europe accounts for more than three quarters of the UK’s steel exports – compared to just 7% for the US
Under current post-Brexit arrangements, the UK can sell steel to Europe tariff free up to a certain level, or quota. Above that, tariffs of 25 per cent apply.
Now, Brussels is looking to bring down that quota, meaning UK exports are more likely to be caught by the charges. And the tariff rate will be doubled to 50 per cent.
Industry insiders hope the announcement will prove a starting point for negotiations and that Britain will be able to achieve a carve-out.
But it represents another period of uncertainty ahead for the industry.
Last year, 78 per cent of the UK’s steel exports – or 1.9 million tonnes – was sold to the EU.
Mr Stace said the Government ‘must go all out’ to secure a deal for the UK ‘or potentially face disaster’.
And he said the UK must now put in place its own measures to defend against a flood of cheap imports.
‘The probability of the EU’s measures redirecting millions of tonnes of steel towards the UK could be terminal for many of our remaining steel companies,’ he added.
Stéphane Séjourné, the EU’s industry commissioner, said the action was to ‘save our steelworks and our European jobs’
Mr Stace this evening told Times Radio: ‘If the UK Government can’t get round the table with the EU and convince the EU that we’re their friend, not their enemy.
‘And then carve out a reasonable quota for UK exports into the EU, then we will see job losses in our sector the like we haven’t seen for a number of years.
‘Therefore now is the time for Government at the very senior levels talking to the EU to get a deal for the UK steel sector.’
Alasdair McDiarmid, assistant general secretary at steelworkers’ union Community, said: ‘The new measures proposed by the EU represent an existential threat to our industry, as well as the thousands of jobs and communities it supports right across the country.
‘We know that ministers will be acutely aware of the grave risks the EU’s proposal poses.
‘It is vital that the Government moves swiftly to negotiate preferential treatment for the UK, including through country-specific quotas.’
Charlotte Brumpton-Childs, from the GMB union, branded the measures a ‘hammer blow’ to the UK steel industry.
She said: ‘This could be the end of steel-making in UK if proper safeguards aren’t secured.’
Tory shadow business secretary Andrew Griffith said: ‘The Government’s lack of a real plan for steel is unravelling fast.
‘From the dead-on-arrival zero US steel tariff to this significant new threat from the EU, it’s clear ministers are flailing as the industry threatens to collapse around them.’
Emily Sawicz, senior analyst at accountancy firm RSM UK, said the renewed uncertainty ‘will create a ripple effect across other industries including construction, automotive, real estate and energy, all of which rely on stable supply chains and access to raw materials’.
She added: ‘Manufacturers have already weathered the storm of US tariffs, but given the value of UK steel exports to the EU market, this will have a far greater impact.
‘The sector is already grappling with energy costs that are roughly 50 per cent higher than EU averages, while continuing to face competition from Chinese exports flooding the global market.
‘Without guaranteed access to the EU and robust domestic protections, UK steelmakers risk becoming uncompetitive in an industry that is increasingly reliant on Government support.’
Chris McDonald, the Government’s industry minister, is set to meet with steel representatives on Thursday.
He said: ‘We will always defend our critical steel industry, which is why we are pushing the European Commission for urgent clarification of the impact of this move on the UK.
‘It’s vital we protect trade flows between the UK and EU and we will work with our closest allies to address global challenges rather than adding to our industries’ woes.
‘This Government has shown its commitment to our steel industry by securing preferential access to the US market for our exporters, and we continue to explore stronger trade measures to protect UK steel producers from unfair behaviours.’
Tory business spokesman Andrew Griffith said: ‘The governments lack of a real plan for steel is unravelling fast. From the dead-on- arrival zero US steel tariff to this significant new threat from the EU, it’s clear ministers are flailing as the industry threatens to collapse around them.’
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