The UK steel sector is in collapse as I reported yesterday.Now the government is imposing 50 % swingeing tariffs on steel imports, doing grave damage to the steel using industries, claiming this will help domestic steel production.
If you look at what they are actually doing, it is geared to helping EU exporters of steel to grab a bigger share of our market as well as putting up costs of UK steel users who will still need tariffed imports.
The decision to prolong the life of the 2 70 year old blast furnaces at British Steel by public subsidy taken in 2025 may still result in due course in closure and maybe some replacement electric arc capacity but the government declines to clarify its plans.It means low levels of UK steel output for the year ahead as we await new electric arc capacity.
This means the output of the steel producing sector maybe around just £2bn whilst the imports may be running around £5bn. Meanwhile the government has decided to impose a tariff on a majority of imports of steel from non EU which is a large new tax on the costs of the steel using industries in the UK. Their latest publication (Department for Business and Trade UK’s steel trade measure from 1 July 2026) reveals a very distorted tariff policy that is unlikely to protect Scunthorpe much, leaving it very vulnerable to EU steel.
It is true that in accord with what seems to be their policy of trying to promote more EU exports to the UK to increase our trade dependence, they have allowed 3.2 m tonnes of imports to be tariff free, with 65% of this allocation going to EU steel producers. They have not extended similar treatment to members of the TPP or to India, where we also have tariff free trade deals which these tariffs override.The EU imports will displace dearer non EU imports up to the quota limits. The EU tariff free imports will likely exceed UK steel output.
The main steel using industries other than construction are vehicle manufacture, mechanical engineering and steel products. The turnover at risk in these industries is in excess of £200 bn. The tariff could bring in over £1bn of extra tax, imposing over £1 bn of extra cost in industries that often have thin profit margins. The government has not given us an estimate of how many jobs and how much profits tax these new taxes will lose us.
It is strange indeed to impose a tariff to try to protect £2b of turnover at the risk to damage to £200 bn of other business turnover. It is also mad to allow tariff free to the EU which is already a large steel exporter to us, whilst taking out other world competitors who might sell us better and cheaper product if they were also tariff free.
July 3, 2026
As you say. “It is strange indeed to impose a tariff to try to protect £2b of turnover at the risk to damage to £200 bn of other business turnover. It is also mad to allow tariff free to the EU which is already a large steel exporter to us, whilst taking out other world competitors who might sell us better and cheaper product if they were also tariff free.”
Not “strange” but insane, suicidal and economic lunacy.
But not really so “strange” as nearly all Labour policies are similarly insane, not thought through and suicidal – like net zero, benefits higher than wages, the attacks on non doms and private schools, rip off intermittent energy, over regulation of landlords, employers, free speech, health and safety, planning, bats, salmon, newts…over taxation of everything so people leave. Rigged markets in energy, healthcare, banking, education…