EU insiders warn the UK steel industry will not get a full carve-out from tariffs taking effect next year but it could have a partial exemption
The UK will not get a full carve-out from new tariffs on steel imposed by Brussels, EU insiders have privately warned.
Sir Keir Starmer has been pushing to limit the impact that a 50 per cent levy on steel imported into the EU would have on British industry.
Steel firms in the UK have sounded the alarm over the tariffs, saying they could be forced out of business if they can no longer sell into their biggest market.
The tariffs pose a major threat to British jobs, while the production of steel is crucial for Britain’s national security.
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But The i Paper understands that while the EU is open to talks with the UK Government on the issue, the best that Britain can hope for is a quota of tariff-free exports rather than a total exemption from the new levies.
It comes following reports that Britain is pushing to form a Western alliance with the EU to align tariff policy and curb China’s dominance in the global steel market.
Brussels announced earlier this month that the standard tariff on steel would be doubled from 25 to 50 per cent, with the overall quota of tariff-free steel from all countries reduced by nearly half.
The measure is seen as an attempt to prevent low-cost Chinese imports from destroying the European steel industry amid a global oversupply of the material.
But the UK’s own industry – already struggling due to US tariffs proposed by Donald Trump – has been caught up in this because post-Brexit trade arrangements and Starmer’s “reset” of EU relations do not protect Britain from emergency measures like this one.
The UK is set to get fast-tracked negotiations on the issue, due to their close trading relationship with the EU, but the deadline for an agreement will not come until June next year, when the new tariffs take effect.
The key question for the steel industry will be whether the quota granted to British exports is set at a high enough volume for trade to continue at its current level. If the quota is significantly less than current exports, firms will take a major hit.
Gareth Stace, director-general of UK Steel, said: “There is a mutually beneficial deal to be made that will ensure UK steelmakers retain access to the EU. The crucial detail is that the volumes must be sufficient so as not to disrupt established trade routes that serve supply chains on both sides of the channel.”
Exporters are also pushing for a carve-out for some specialist steel products, such as those used in the defence sector, so they do not risk getting shut out entirely under a quota system.
As well as the direct economic impact, ministers argue that preserving steelmaking capacity within the UK is essential to shore up national security. Steel is a key component for Britain’s military defences and critical national infrastructure.
Trade unions have warned that thousands of jobs are at risk from the EU tariffs, which come at a time when the future of the sector is in doubt.
A Government spokesman said: “We are continuing our engagement with the EU following their recent announcement on steel quotas while ensuring we protect trade flows.
“This Government has shown its commitment to the steel industry by securing preferential access to the US market for exporters, and we will continue to stand up for our economic interests as part of our plan for change.”
Earlier this year, the Government took over British Steel to prevent what it said was the imminent shutdown of its facility in Scunthorpe, which would have ended the UK’s ability to make new steel from scratch.
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