UK (Parliament Politics Magazine) – UK steelmakers threaten legal action after tariffs on Asian imports leave shipments stranded, driving industry-wide disruption and rising costs.
As reported by The Guardian, British steel firms plan legal action against the government over Asian steel tariffs, saying the move has triggered a “tsunami” of industry problems.
Business Secretary Jonathan Reynolds cut tariff-free imports of raw steel from Vietnam and South Korea this summer to protect UK producers from cheap competition.
What did UK steel firms say about the sudden tariff hike?
A coalition of UK steel manufacturers has sent a legal warning to Jonathan Reynolds after the July tariff cut on raw steel. Shipments already paid for are now liable for a 25% tariff, with Mr Reynolds expected to respond this week.
Manufacturers claim the business secretary gave just 24 hours’ notice on the quota cut, leaving thousands of imported tonnes stranded at UK ports. Firms warned that steel already in transit from East Asia was “bought and paid for” but will now face UK tariffs on arrival.
What did CBM say about the UK steel tariff impact?
The Confederation of British Metalforming reported members faced a “tsunami” of disruption, including higher costs and slowed steel shipments across the industry.
The group added that supply delays “are reverberating throughout the domestic industry.”
Stephen Morley, CBM president, said steel piling up at ports was
“creating a domino effect, with businesses facing additional costs, logistical challenges, and uncertainties about the future of their operations.”
He said his members favoured measures to safeguard UK steel production, but added that Mr Reynolds
“exacerbated the existing pressures on firms already grappling with the aftermath of the current economic climate.”
According to insiders, CBM members are combining efforts to fund a judicial review of Reynolds’s decision, after sending him a pre-action protocol letter.
Paul Whitehouse’s views on the UK steel tariff hike
Steel & Alloy’s managing director, Paul Whitehouse, warned that the company faces over £500,000 in extra tariff costs.
He added,
“The government has shot itself in the foot. It wants to help the steel industry, but acting in this way, giving just 24 hours’ notice, has only increased our expenses. We work on very small margins – 1% to 2% – and these extra costs matter.”
Tariffs and quotas to protect UK steel firms
In Britain, Tata Steel in South Wales and British Steel in Scunthorpe are the leading raw steel producers. The government took control of British Steel in April after concerns that its Chinese owner, Jingye, might shut its blast furnaces.
Speciality Steel UK, part of Sanjeev Gupta’s Liberty Steel Group and employing 1,500 people, is under threat of closure.
British steel firms have struggled to secure domestic buyers after a decline in demand from long-term customers. This year, both car production and commercial construction, which rely heavily on steel, have slowed in the UK.
Quotas and tariffs are in place to protect UK raw steel producers from cheap Chinese imports and limit steel from the EU.
What impact will Jonathan Reynolds’s tariff decision have on UK steel?
Pressure has grown since February as steel-producing nations sought new markets, following US President Donald Trump’s threat of high tariffs on imports. UK exports to the US have also been affected by Washington’s measures.
The government said its decision was based on a recommendation from the Trade Remedies Authority, but the metal industry accused Mr Reynolds of ignoring the independent body’s suggested changes.
The TRA recommended a 40% cap on tariff-free steel imports from “other” countries, including Vietnam, Thailand, and South Korea. Mr Reynolds reduced the cap to 15% and said it would take effect the next day.
The steel firms had expected the new rules to take effect in October, giving them time to find alternative suppliers.
Duties of Trade Remedies Authority
The Trade Remedies Authority checks if foreign goods harm local businesses and suggests tariffs or limits to protect them.
The authority also tracks the impact of these measures with regular reviews to ensure they work effectively.
What are tariffs?
Tariffs are taxes or fees imposed on goods imported from other countries. They act as trade barriers to protect domestic industries and generate government revenue. They also increase the cost of foreign products for consumers.
Types of tariff are:
- Ad valorem tariffs
- Specific tariffs
- Compound tariffs
- Protective tariffs
- Revenue tariffs
- Retaliatory tariffs
- Preferential tariffs