Steel industry in UK warns of ‘biggest crisis’ ever as EU hikes tariffs
Steelworker at the blast furnace tap of the Salzgitter AG steel mill in Salzgitter, Germany, on March 02, 2020.
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The European Union’s decision to raise steel tariffs and sharply reduce import quotas has sparked widespread concern in Britain as well as growing discontent among carmakers on the continent.
Block Announced plans to reduce duty-free quotas on imported steel on Tuesday – A 47% reduction compared to 2024 steel quotas is proposed – and an increase in customs duties on excess imports from 25% to 50% is proposed.
The European Commission said the measures were a response to calls from workers, industry and some member states to “provide strong and permanent protection for the EU steel industry to protect jobs in the EU and support the sector in its efforts to decarbonise”. The proposal would replace the steel safeguard measure, which expires in June 2026.
The tariff increase sparked an immediate backlash in the UK, with the country’s beleaguered steel industry already suffering a series of blows, including the closure of steel mills that have led to thousands of job losses and 25% tariffs on US steel exports to the US.
“This is perhaps the biggest crisis the UK steel industry has ever faced,” industry body UK Steel chief executive Gareth Stace said on Tuesday. he said.
“The government must do all it can to strengthen our trading relationship with the European Union to secure UK country quotas or potentially face disaster,” he added.
RSM UK director and Industrial senior analyst Emily Sawicz told CNBC that the EU’s announcement represents a “significant threat” to the UK’s steel industry.
“The EU accounts for around 80% of the UK’s steel exports, so these tariffs risk cutting off access to the UK’s largest and most strategically important market at a time when the sector is already under huge pressure from global competition and rising energy costs,” he told CNBC’s “Europe Early Edition” on Wednesday.
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The bloc’s move follows similar tariffs imposed by the United States and Canada on foreign steel to block cheap imports, largely from China, which they say are hurting their domestic steel industries.
US President Donald Trump came to the agenda Customs duties on most steel and aluminum imports were increased from 25% to 50% this year. Canada tightens import limits and imposed a 25% surcharge on imports of steel originally smelted and cast in China.
China denies accusations that it is dumping ultra-cheap steel onto the global market.
On Tuesday, the EU stated that “steel overcapacity is a global problem that requires strong, genuine and joint action by all partners.”
Tariffs were promoted as a way to protect national steel industries, but industries dependent on the commodity (most notably the automotive industry) opposed quotas and tariffs.
An overview of the Tata Steel steel mill in Port Talbot, United Kingdom, on March 27, 2018.
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The UK will likely seek exemption from the EU and may be encouraged by the fact that Norway, Iceland and Liechtenstein will not be subject to the EU’s steel tariff quotas or duties as they are in the European Economic Area (EEA).
The Commission also signaled its willingness to exempt Ukraine from these duties, stating that “the interests of a candidate country, such as Ukraine, which faces an exceptional and urgent security situation, should be taken into account when deciding on quota allocations, without undermining the effectiveness of the measure.”
The UK is not in the EEA but is a close trading partner and ally of the EU. Following the news of the tariff increase, Prime Minister Keir Starmer said the government was in talks with both the EU and the US regarding steel tariffs.
Retaliatory measures may not be off the table, as UK Industry Secretary Chris McDonald stated: “We continue to explore stronger trade measures to protect UK steelmakers from unfair treatment.”
But he added that it was “vital that we protect the flow of trade between the UK and the EU and we will work with our closest allies to tackle global challenges.”
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The EU announcement was not well received across the continent, with the European Automobile Manufacturers Association (ACEA) saying the measures could threaten the domestic car industry.
The automaker said European automakers source about 90% of their direct steel purchases from the EU and are “most concerned about the inflationary impact the restrictions will have on European market prices.”
“A dramatic reduction of quotas and a doubling of non-quota tariffs to 50% will significantly reduce the possibility of relieving pressure on the European market through imports,” ACEA said in a press release. he said.
Employees of German automaker Porsche AG work on the Porsche Taycan electric sports car at the Porsche production facility in Stuttgart, southwestern Germany, on September 26, 2022.
Thomas Kienzle | AFP | Getty Images
In addition, it was stated that a new rule of origin based on the “melt and pour” principle would further restrict imports and “create a major administrative burden for European users of imported steel products.”
ACEA Director General Sigrid de Vries said the body recognized the need for some level of protection for the steel sector, but added: “We think that the parameters proposed by the Commission go too far in ring-fencing the European market. In this measure we need to find a better balance between the needs of European producers and steel users.”
