Britain’s steel industry has expressed disappointment in the move to shelve plans for the elimination of US tariffs on exports of the metal.
The UK has paused its push to cut the levy, which stands at 25%, to zero as originally agreed earlier this year, in a blow to the sector which is already reeling from major financial difficulties in recent years.
It is understood that Britain could have sought a small tariff-free quota for its steel exports to America as part of ongoing trade talks, but that this would leave the rest exposed to the 50% US global tariff faced by other nations.
Director-general of industry trade association UK Steel, Gareth Stace, said: “It will be disappointing if we do not have the tariff-free quota level, but if the US was never offering that deal, then the final decision on 25% offers a degree of certainty and potentially a competitive advantage so long as other countries remain at 50%.
“The US administration has prioritised the reduction of imports over its historic trading relationship with UK steelmakers.
“The reality is that the deluge of heavily subsidised steel flooding into international markets is forcing countries across the world to erect trade barriers to protect their industries.”
He added that it was “even more imperative now” for the UK Government to beef up its own trade defences to ensure British steelmakers “have a sustainable share of their own market.”
“In these market conditions, the last country to protect their industry will be the first to lose it,” Mr Stace said.
Industry sources expressed concerns that other trading partners may look to the UK’s arrangement in pushing to lower their own US tariff rates on steel, which could make Britain’s position less competitive.
The British Chambers of Commerce said the the news would “greeted with dismay” by UK industry given the earlier pledge to work towards a 0% rate.
“We urge the Government to continue dialogue with the US to keep the full potential of the trade deal on the table,” William Bain, head of trade policy at the BCC, said.
A US-UK deal signed earlier this year slashed trade barriers on a number of goods for both countries but left British steel exports standing at 25%, rather than falling to zero as originally agreed.
Officials have since been working to secure a more favourable arrangement for the sector, which has struggled with high energy prices, increased tariffs and global overcapacity.
However, it emerged on the eve of Donald Trump’s unprecedented second state visit to Britain that efforts to slash the levy to zero had been put on ice.
The US president had hinted at possible tariff relief for British steel as he boarded Air Force One earlier on Tuesday, but Downing Street would not be drawn on the scope for movement ahead of the two-day stay.
“We’ve made a deal, and it’s a great deal, and I’m into helping them,” he said.
Asked on Tuesday afternoon whether any progress was expected in cutting the levy, the Prime Minister’s official spokesman said: “There’s a range of things that we’re going to discuss with the president… we’ve obviously got a landmark trade deal.
“(We will) continue to discuss with them how to take that further. But, for obvious reasons, I’m not going to get ahead of those outcomes.”
On Wednesday, Mr Trump was treated to a ceremonial welcome by the King at Windsor Castle and is expected to meet Sir Keir Starmer at the Prime Minister’s country estate, Chequers, on Thursday.
There are no public-facing engagements set for the president, with thousands expected to take part in major protests against his trip.
In a letter to Business Secretary Peter Kyle, his opposite number Andrew Griffith demanded the Government “correct the record” after previously saying it had negotiated the steel tariff down to zero.
“Ministers in this government said a deal had been reached with the US to cut steel tariffs to 0%,” the Tory frontbencher said.
“This has now been proven to be untrue, with no such deal in existence. This is a significant breach of public trust.
“Furthermore, the Prime Minister said the deal would save thousands of jobs, inadvertently admitting that thousands of jobs will be lost because of your enormous failure to secure a deal.”
He added: “I call on you to correct the record and to reverse your decision to not pursue a further reduction in tariffs for the sake of the British steel industry.”
Furthermore, the Prime Minister said the deal would save thousands of jobs, inadvertently admitting that thousands of jobs will be lost because of your enormous failure to secure a deal.
The Liberal Democrats said the Government had “thrown in the towel” to the US president, who “reneged on” the original agreement for US steel tariffs to fall to zero as part of the British-American trade pact.
Deputy party leader Daisy Cooper said: “It looks like the Government has thrown in the towel instead of fighting to stand up for the UK steel industry.
“We were told US tariffs on UK steel would be lifted completely – now that’s turned out to be yet another promise Trump has reneged on.
“It just shows Trump is an unreliable partner and that rewarding a bully only gets you so far.
“The best way to protect our economy is to stand with our allies in Europe and the Commonwealth and end Trump’s damaging trade war for good.”
Over the weekend, Liam Byrne, the Labour chairman of the Commons Business and Trade Committee, said the state visit is “no mere pageant” and warned the Government that “we can’t escape the truth that Britain now trades with its biggest partner on terms that are worse than the past”.
A Government spokesperson said: “Thanks to the strength of the UK-US partnership, we are still the only country to benefit from a 25% tariff on steel exports to the US, reinforcing our position as a trusted source of high-quality steel.”
They said Britain was “continuing to work closely with the US to deliver certainty for UK industry, protect skilled jobs and support economic growth.”
