The EU shocked the UK steel industry on Tuesday with an announcement of 50% import tariffs \u2013 with no apparent carve-out for metal crossing the Channel.<\/p>\n
Why is the UK steel sector so worried?<\/p>\n
The EU is the UK\u2019s biggest customer: 78% of all UK steel exports, or 1.9m tonnes, went to the bloc in 2024. The prospect of punitive tariffs on a large chunk of that would make many British products uncompetitive overnight.<\/p>\n
UK steel production chart<\/a><\/p>\n The reason for that reliance is partly geographical proximity: of the EU countries, Ireland is the biggest buyer. But from 1973 until 2020 the UK was part of the EU, whose forerunner was the European Coal and Steel Community<\/a> \u2013 a single market giving easy access to other members of the trade bloc. Brexit has left the UK out in the cold.<\/p>\n The European Commission has said Norway, Iceland and Liechtenstein, who are not in the EU but are integrated into the single market via the European Economic Area, will not be affected by the tariffs or quotas.<\/p>\n Why has the EU imposed tariffs on steel?<\/p>\n Its steel industry is struggling. The EU\u2019s steel industry \u201cis as good or as bad as the UK\u2019s\u201d, with plants that have not been modernised for 40 years, one diplomatic trade expert told the Guardian. Steelmakers have been struggling for years with high energy costs \u2013 Germany\u2019s are among the highest in Europe (although still smaller than the UK\u2019s<\/a>).<\/p>\n However, the big threat in recent years has been the glut of Chinese steel forcing down global prices, along with the devastating 50% tariff imposed by Donald Trump on US imports of the metal in June<\/a>.<\/p>\n Current \u201csafeguard\u201d measures to prevent steel dumping are due to expire in June next year, giving the European Commission the perfect opportunity to try to save the sector, which industry commissioner St\u00e9phane S\u00e9journ\u00e9 said on Tuesday was threatened with \u201ccollapse\u201d.<\/p>\n A key aim for EU steel industry body Eurofer is to increase the utilisation of its plants, which makes them more profitable. Capacity utilisation has dropped from nearly 80% in 2008 to 65% in 2024; the lobby group wants that figure as high as 85%.<\/p>\n What is Brussels proposing? <\/p>\n The main measure is an increase in the headline EU steel tariff to 50%, up from 25%.<\/p>\n However, there will still be tariff-free import quotas. That will allow in 18.3m tonnes a year \u2013 a steep reduction of 47% compared with 2024 steel quotas.<\/p>\n Top EU sources chart<\/a><\/p>\n The key question for Britain and other EU trading partners is how that much smaller quota will be allocated. If the UK were to receive a quota equal to its planned exports (once Tata Steel and British Steel\u2019s exports are back up and running at full tilt after upgrades<\/a>) then the damage would be limited.<\/p>\n Top EU importers chart<\/a><\/p>\n UK steelmakers on Wednesday told industry minister (and former steel executive) Chris McDonald that the UK must push for country-specific carve-outs from the tariffs, and for the UK to quickly replace its own expiring \u201csafeguards\u201d<\/a> and prevent a flood of diverted steel<\/a>.<\/p>\n The EU will also add a condition that only steel \u201cmelted and poured\u201d in exporters\u2019 markets will count. For instance, that would mean that any steel imported from India to south Wales by Tata Steel would count as Indian, not British, for quota purposes.<\/p>\n Is the EU playing a Donald Trump card? <\/p>\n Yes and no. The EU has spent all summer railing against Donald Trump\u2019s tariffs as \u201close-lose\u201d and \u201cbad for everyone\u201d. But senior officials and S\u00e9journ\u00e9 said they have no choice but to step in to protect an industry that employs 300,000 directly and more than 2 million others indirectly.<\/p>\n Trade commissioner Maro\u0161 \u0160ef\u010dovi\u010d told reporters on Tuesday that he disagreed with suggestions it was \u201chypocritical\u201d of the EU to impose tariffs as \u2013 unlike the US \u2013 the tariffs will comply with World Trade Organization rules and are open to negotiations on quotas, rather than simply being imposed on all and sundry.<\/p>\n Who is the target of the tariffs?<\/p>\n Without doubt, China \u2013 and it isn\u2019t even the biggest supplier to the EU after earlier trade measures targeting direct imports. Eurostat data shows India is the biggest direct supplier, exporting almost \u20ac4bn to the EU in 2024, followed by South Korea (\u20ac3.6bn) and the UK (\u20ac3.2bn). EU data shows, in fact, that imports from India went up by just under 90% between 2019 and 2024.<\/p>\n China in global steel production chart<\/a><\/p>\n But the rate at which China is producing steel is fuelling global overcapacity. EU officials say the over-supply has \u201cworsened\u201d and become \u201cabsolutely untenable\u201d. Not to introduce safeguards would be \u201cextremely damaging\u201d and \u201cpossibly fatal\u201d, officials said.<\/p>\n China steel production chart<\/a><\/p>\n The EU is less concerned about India because it hopes to do a free trade deal by the end of the year. China, however, remains outside any formal trade regime, and the EU feels that, as one of the few open markets left, Beijing is guilty of unfair practices. Pointedly, officials said on Tuesday: \u201cWith this proposal, we are again reiterating the invitation to have a serious conversation about that. Regardless of what the Chinese say, we don\u2019t think that this problem of overcapacity is going away.\u201d<\/p>\n Where else could UK steelmakers look?<\/p>\n The top five steel export destinations for the UK in 2024 were all within the EU. The sixth was the US, where buyers must pay 25% tariffs on imports from Britain \u2013 after the two countries abandoned a zero-tariff deal<\/a> agreed by Trump and Keir Starmer. That gives the UK some advantage over other countries who pay 50%.<\/p>\n Aside from the US, British steel exports would have to contend with the same global glut of Chinese steel seeking a buyer at any price. That is not an attractive prospect.<\/p>\n Another place the UK could look is inwards: Britain imports twice the steel it makes. The chancellor, Rachel Reeves, pledged at Labour\u2019s party conference last week to direct government spending on steel \u2013 such as for warships and railways \u2013 to British steelworks.<\/p>\n How did Europe\u2019s industry react?<\/p>\n