The UK is expected to reduce the amount of foreign steel it allows in tariff-free, as the government looks to protect its domestic industry amid a global glut and a rise in protectionism.
Ministers are considering changing the quota system that allows a quantity of the metal to be imported before imposing a 25% levy on anything above that level.
Lower tariff-free quotas could be announced in April, for implementation from 1 July, according to three people with knowledge of discussions.
The development comes amid a surfeit of steel driven by supplies from China, which is by far the world’s largest producer. Chinese steel exports hit yet another all-time high in December, while other producers such as Vietnam, Korea and Turkey are also trying to find customers.
Donald Trump first responded to the glut in March 2018 during his first presidential term with steel tariffs of 25%. He then doubled them to 50% in June last year. The levies, which effectively shut off much of the US market to steel imports – kicked off a wave of protectionism, as producers scrambled to find new buyers, whatever the price, and markets such as the EU and Canada reacted by putting up their own barriers.
Imports of steel into the UK are covered by quotas known as safeguards, but these are due to expire in June.
The UK is thought to be supportive of new quotas with lower import limits. The government retains control over the British Steel and Speciality Steel steelworks that would be left exposed if the steel safeguards are not replaced.
The steel safeguards were first imposed by the EU in 2018 – when the UK was still a member – to prevent a flood of cheap steel redirected from the US. In 2021 the UK adopted the same measures after Brexit and extended them until the end of June 2026. However, World Trade Organization rules mean the measures cannot be extended again.
The EU said in October that it would replace its safeguards with 50% tariffs and smaller duty-free quotas. The UK has been forced to negotiate for a protected allocation from the EU’s quota, with fears for the future of the British industry if it is shut out.
The UK steel industry has argued vociferously that failure to replace its safeguards with fresh quotas would leave the country open to a flood of cheap products.
Vlad Darahan, the head of international trade and compliance at Tata Steel UK, said: “Current UK quotas are too generous to overseas suppliers and in certain cases higher than the total UK demand of that product. This results in the UK being an unfairly priced dumping ground for cheap imports.
“We are urging the government to move quickly to implement a clearer, stricter UK system that limits steel imports based on what the country actually needs while continuing to work constructively with the EU to agree fair limits that work for both sides.”
The steel industry has held detailed talks with the Department for Business and Trade, as well as with steel buyers, over suitable quotas for specific categories of metal.
However, some companies that use steel have opposed lower quotas, arguing that the measure will push up prices for raw materials, and that UK steelmakers are unable to meet demand in some areas.
Gareth Stace, the director general of UK Steel, which represents the sector, said: “This is a fundamental issue. Much of the UK steel industry will no longer be viable unless the government puts in place robust trade measures.
“Until China restrains its model of subsidising colossal production levels and exporting its overcapacity problem to the rest of the world, countries such as the UK will have to utilise trade measures or face deindustrialisation.”
A government spokesperson said: “This is speculation about a complex issue where no final decisions have been taken, but we are working at pace to ensure the best outcomes to protect UK industry.
“This government has been crystal clear in committing to a bright and sustainable future for steelmaking and steel jobs in the UK. We’ll set out our long-term vision for the sector in our steel strategy which will be published this year.”
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