UK-US trade deal sees steel tariffs removed

Today President Trump and Prime Minister Starmer announced an economic deal removing the 25% tariffs on UK steel exports to the US that were imposed in March. It is not yet clear whether this will apply to steel derivative products and whether only steel melted and poured in the UK will benefit from the 0% tariff. 

This outcome is hugely significant for the UK steel sector. The US is the UK’s second most important export market for steel after the EU, particularly as it is a high value market. US exports account for 9% of UK steel exports by value and 7% by volume. This is mostly specialist steel that goes into applications such as defence, oil and gas, construction equipment and packaging. At a time of already highly challenging market conditions, with global overcapacity and oversupply, high energy costs, and weak demand, the removal of tariffs offers some respite. 

We commend the UK Government for persevering in its efforts to negotiate this deal and lifting a burden off the UK steel industry by allowing UK exports to the US to resume. It is also key to consider the indirect effect of the US steel tariffs on the rest of the world, resulting in trade diversion and import pressure into the UK market. We await further detail to see whether the UK Government has made pledges to strengthen the UK’s trade defences as part of this deal, so that we don’t see our domestic market share shrink even further from an unsustainable 35%. 

The UK is currently only partially shielded from trade diversion as steel safeguard quotas have been liberalised every year and are now 22% larger than when they were first introduced in 2018. All while UK steel demand has contracted by 16%. It is essential the safeguard quotas are urgently tightened - as the EU has done with its own measures. In parallel, a robust trade defence mechanism needs to be worked out and implemented as soon as possible ahead of the steel safeguards expiring in June 2026. 

UK Steel Director General, Gareth Stace, said: 

“The UK Government’s cool-headed approach and perseverance in negotiating with the US clearly paid off. This deal will offer major relief to the UK steel sector at a time when it is battling numerous other challenges, not least global overcapacity, high energy costs and weak demand.

“The impact of US steel tariffs is not limited to UK exports, but also the damaging consequences of trade diversion from other markets. Bolstering the UK’s trade defences is therefore also paramount. 

“Our Government showed that it listens to its domestic industry and is ready to act in the national interest. Now it must use this momentum to deliver a bold and comprehensive Steel Strategy that will set our sector on a sustainable footing once and for all. This must include long-term effective trade defences, competitive electricity prices, robust carbon leakage protection and supportive public procurement.”

ENDS 

Contact details 

Chrysa Glystra, Director, Trade and Economic Policy, UK Steel 

07771 388692 | cglystra@makeuk.org  

Notes to Editors 

• UK exports to US: 
  • In 2024, the UK exported 180 thousand tonnes of semi-finished and finished steel to the US, worth £370 million. This accounts for 7% of the UK’s total steel exports by volume and 9% by value.
  • The UK exported 300Kt (£490mn) of steel to the US in 2017 before Section 232 tariffs were imposed in 2018. The UK exported an average of 200Kt (£320mn) over 2018-2021. The UK and the US agreed a system of tariff rate quotas in 2022 seeing exports recover slightly to 235Kt (£517mn). However, the next two years have seen a tough market for steel as a result of high costs and weak demand, which has impacted UK steel production and exports. In 2023, the UK’s steel exports to the US totalled 165Kt (£388mn).
• Global excess capacity:
  • Global excess capacity was estimated at 602Mt in 2024 and is forecasted to reach 721Mt by 2027 – equivalent more than 100x the UK’s production.
  • Capacity expansions in Southeast Asia and the Middle East are continuing at an alarming rate – these are largely state-funded, mostly for high-emission blast furnaces and often do not correspond to domestic demand trends.
  • Steel demand is weakening in key markets, notably China, translating into rising oversupply which is dampening steel prices and spilling over into other markets.
  • Import pressure on the UK market is on the rise amid a weak demand environment. The import share in 2024 already increased to 65% from 60% in 2022. The sharpest import increases came from non-EU sources, mainly India, Vietnam, China, South Korea, Turkey and Algeria. Importantly, these are also countries that have seen significant increases in imports from China or are within China’s top 10 exporting destinations.
  • Over two thirds of steelmaking capacity is in countries that have Net Zero targets later than 2060 or none at all.
• UK Steel safeguards: 
  • Safeguards are a type of trade remedies measure intended to address unexpected surges in imports that are damaging or threatening to damage domestic producers. Safeguards can take various forms but the most common is a tariff-free quota – this allows the continuation of tariff-free imports at the same level or higher as the period before the safeguard was introduced.
  • The UK inherited its steel safeguards from the EU which introduced its own equivalent measure in 2018 principally to guard against import diversion from the US after the introduction of Section 232 tariffs by President Trump. This mechanism expires under WTO rules in June 2026.
  • The UK is only partially shielded from trade diversion expected to occur as a result of President Trump’s new 2025 25% steel tariffs. Steel safeguard quotas have been liberalised every year and are now 22% larger than when they were first introduced in 2018. All while UK demand has contracted by 16%.
  • Even a small proportion of surplus material ending up in the UK would completely overwhelm the UK steel market. Most of these imports will be of high-emission steel.
• EU steel safeguards review:
  • The Commission reviewed its steel safeguards, resulting in tariff-rate quotas becoming more restrictive. The amendments took effect on 1 April.
  • The Commission has reduced the liberalisation rate from 1% to 0.1%, limiting the amount of steel that can be imported into the EU tariff-free.
  • Additionally, countries will no longer be able to use the entire volumes of unused quotas of other countries, including those of Russia and Belarus. The 'carry-over' mechanism, which allowed countries to roll over unused quotas to the next quarter, has also been eliminated for categories with high import pressure and low consumption.
• EU Steel Action Plan:
  • The European Commission unveiled its bold Action Plan for Steel and Metals on 19 March, which will deliver comprehensive measures to protect and strengthen the European steel industry. It will:
  • Ensure an affordable and secure energy supply for the sector
  • Prevent carbon leakage
  • Promote circularity
  • De-risking decarbonisation
  • Protect quality industrial jobs.

About UK Steel: UK Steel is the trade association for the UK steel industry. It represents all the country’s steelmakers and most downstream steel processors.

The UK steel sector: 

• Produced 4Mt of crude steel in 2024 and supplied 35% of the UK's annual demand of 8.1Mt
• Employs 36,800 people directly in the UK and supports a further 46,000 in supply chains
• The median steel sector salary is £39,245, 24% higher than the UK national median and 33% higher than the regional median in Wales, and Yorkshire & Humberside where its jobs are concentrated
• Directly contributes £1.7 billion to UK GVA and supports a further £2.2 billion
• Directly contributes £3.1 billion to the UK’s balance of trade
• 96% of steel used in construction and infrastructure in the UK is recovered and recycled to be used again and again