US Steel and Aluminium Tariffs

Private Notice Question

15:48:00

Asked by

To ask His Majesty’s Government what steps they plan to take to mitigate the impact of US steel and aluminium tariffs on the UK manufacturing sector.

My Lords, it is disappointing that the US has today imposed global tariffs on steel and aluminium. The UK will always be a champion of free and open trade, which is essential in delivering our Plan for Change. We are resolute in our support for the UK steel industry. This Government are working with affected companies today, and we back the industry’s application to the Trade Remedies Authority to investigate what further steps might be necessary to protect UK producers.

I thank the Minister for her Answer, and I am pleased to hear about the steps she is taking. To move on slightly, I was pleased to hear that the Prime Minister acknowledged, during Prime Minister’s Questions today, the Brexit benefit of seeking a trade agreement with the United States to avoid tariffs. However, while the UK looks to negotiate with Washington, the EU has already retaliated against US tariffs, so the Government must now recognise that resetting relations with the EU at this moment risks dragging the UK into an escalating transatlantic trade war. Last month, a close ally of Donald Trump, Stephen Moore, made it clear that Britain will have to choose between its special relationship with the US and closer ties to the EU. The time for vague statements and talk of all options being open is surely over; we need clarity. Now that the US and the EU are openly in a trade war, do the Government not see the urgency of making their position clear? What will the UK prioritise—the special relationship or Brussels?

My Lords, as the Prime Minister has made clear, when it comes to the national interest, he rejects having to make any false choice between allies. We are committed to continuing our work with both the US and the EU to remove barriers to trade and help UK businesses grow. Our number one priority will be the growth of the UK economy and free and open trade with our most economically important partners. We will only ever sign trade agreements which align with the UK’s national interests.

My Lords, the noble Lord, Lord Callanan, speaking to the last Question, noted that the Trump Administration had been completely outrageous to Canada. By extension, it must therefore have been completely outrageous to the European Union, so it is interesting to hear the opposite being argued by the noble Lord, Lord Sharpe. Does the Minister agree that now is the time to work with our allies? The noble Baroness, Lady Chapman, said that Canada is our closest ally. The Prime Minister has said that we need to reset our relationship with the European Union. Why, then, have we taken a different approach to those two closest trading allies?

My Lords, as the Prime Minister has said, this is a time for a cool-headed approach on the issue of trade tariffs. The UK and the US have a strong economic relationship that is fair, balanced and reciprocal. The tariffs on steel, aluminium and derivatives being proposed by the Trump Administration are global; they are not targeted at the UK. In the meantime, we have been having regular, detailed conversations with the US Administration and have repeatedly and emphatically made the case for the UK to be exempt from proposed tariffs—most recently with the Secretary of State speaking to US Commerce Secretary Howard Lutnick on Sunday and US Trade Representative Jamieson Greer on Tuesday. We have made that point over and over again. This is a time for a cool-headed approach to any possible tariffs, and we will take every action we need to in order to defend the UK’s national interest.

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We will hear from my noble friend Lady Rafferty.

My Lords, I welcome the Opposition’s sudden interest in the fortunes of the British steel industry—a sector which was neglected over the past 15 years and has suffered enormously as a result. This Government launched a consultation on a steel strategy earlier this year. Could my noble friend update the House on the status of that consultation? How soon does she envisage the strategy being brought forward?

I thank my noble friend for raising this issue. The steel strategy consultation remains open until 30 March, at which point we will analyse responses received. The consultation is a key step forward in developing the steel strategy, ensuring it best promotes long-term, sustainable growth that will provide benefits to communities across the UK. It will provide us with a clear evidence base on the needs of the steel sector and its customers by leveraging a wide range of views and expertise and will bring those views to the heart of steel-making. We are committed to bringing forward the steel strategy in the spring, and we will learn from the lessons of that strategy.

My Lords, is it not the case that the reckless and ill-thought-out measures being taken by President Trump will only damage the US economy itself—they will not prevent imports but will harm immensely the steel-using industries that are the main market for the US steel industry? It is an extremely short-sighted measure by President Trump. His having taken that measure is no reason for us to follow in such a short-sighted policy. We have the much more important objective of trying to negotiate better trade terms with the United States. These are general tariffs, not ones against the UK in particular, and the Government are quite right not to react by imposing tariffs ourselves.

I very much thank the noble Lord for that intervention. Let us be clear that industry here does not want to see a trade war with both sides escalating the situation. Standing up for industry means finding a solution, and we are working on that solution. The UK and the US have a strong economic relationship which is fair, balanced and reciprocal. We have £1.2 trillion invested in each other’s economies, supporting more than 2.5 million jobs across both countries. It is important that we maintain and build on those relationships. As I said before, cool heads are aware of and monitoring very carefully what is going on, but we do not want to do anything reciprocal at this stage.

My Lords, will my noble friend comment on how she sees the development of steel in this country? I am pleased that the Opposition are now interested in that. I represented a community that lost what I think was at the time the most cost-effective steel-making plant in the country; I then had to represent the community that was devastated following that, under Mrs Thatcher’s Government, so I am really pleased that they are now interested in putting manufacturing at the heart of this country. In the north-east, we have been developing some very good greening of the industry. Can the Minister reassure us that the plans that the Government have for growth will involve re-energising that industry so that we get the new houses and new infrastructure that we need in this country and rebuild a steel-making industry here?

I assure my noble friend that we are determined to support and invest in the steel sector. We already have plans and are taking steps to do that. We see a bright future for steel in the UK, and our plan for steel, which will be published in the spring, will establish a long-term vision for the industry, promoting long-term growth and securing jobs for the future in all parts of the country. The point that my noble friend makes is absolutely right about that. This is about ensuring jobs, protecting the industry for the future and making sure that we can go forward on a competitive basis in the global trade on this issue.

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My Lords, we will hear from the noble Baroness, Lady Hoey, next and then the noble Lord, Lord Caine.

My Lords, I think that His Majesty’s Government are quite right not to rush into retaliatory measures, but will the Minister say whether they are giving any thought to what will happen when the EU retaliates? What happens to Northern Ireland, which has been left within the EU for these kinds of matters? That is something that they need to be looking at urgently.

My Lords, Northern Ireland is a part of the United Kingdom’s customs territory and internal market. We will continue to monitor closely the impact on Northern Ireland of any tariffs. While the framework means that tariffs would apply on US goods moved into Northern Ireland for the limited subset of US goods in line with its protection of the UK and EU markets, there is a duty reimbursement scheme in place where those goods do not enter the EU. The duty reimbursement scheme enables traders to reclaim or remit applicable duties in full without any limit on total claims. Businesses moving goods into Northern Ireland should contact HMRC for more information about these schemes.

My Lords, does the Minister agree that tariffs harm consumers and encourage industrial inefficiency? Does she agree that the British economy was at its most successful when it was pursuing a policy of unilateral free trade in the 19th century?

The noble Lord makes an important point about our commitment to free trade. The Prime Minister has made our position absolutely clear on this matter. I am sure there are lessons from history that we can learn on all of this. We will continue to promote our policy of free trade and encourage new agreements wherever it is in our interest.

Does my noble friend agree that there is very little prospect of a comprehensive free trade agreement with the United States because of its stance on agricultural products, which we could not possibly accept? However, there is a real possibility of an agreement on high technology, and that is what we should aim for.

My noble friend is absolutely right that we are continuing to discuss with the US the possibility of a trade deal. In the economic and tech sectors, there is the possibility of agreements on the basis of mutual interest. Those discussions are ongoing, and I hope to update the House on them in due course.

My Lords, while I very much welcome the action and words that the Prime Minister is using to defend the United Kingdom in this respect, does the Minister share my concern that, if the United Kingdom is to be exempt from any tariff war with the United States but the EU is not, the EU will seek some kind of revenge on the United Kingdom? What will the Government’s reaction be if that is the case?

My Lords, that is very much a hypothetical question. As I said earlier, we have very good relations with both our key partners, the US and the EU, and we will continue to aim to maintain those relationships. We have seen no sign that the EU will take any action against us, and we will continue to pursue good, friendly and trade-based relationships with the EU.

My Lords, the steel that the US imports from us is specialist steel. It is interesting that, for the new ballistic missile submarines—both our own and the American ones—a common missile compartment is being designed and built by the UK. It will contain specialist steel, for which the US will pay more money. The Government are absolutely right not to take any action at this stage, because people will look again at this and there will be sensible negotiations.

My noble friend makes a very good point. As I said, we very much support the strengthening of our steel industry in this country. It is very important to us, and we are taking a number of measures to invest in and build that sector, including the specialist sectors he referred to.

My Lords, will the Government give us an assurance that they will be extremely wary as they enter into, or continue with, trade talks with the United States? It has always sought very exploitative trade agreements to take advantage of both our National Health Service and our agriculture. The Conservatives negotiated a very weak trade treaty with Australia, which has done only damage. In these negotiations, will this Government be careful that they do not follow in the previous Conservative Government’s footsteps?

My Lords, I assure the noble Baroness that we will act only in the UK’s interest in any discussions we have with the US. The National Health Service is not on the agenda for those discussions.

My Lords, in our negotiations with the United States, the Minister should be very cautious on relying on expressions of good will from President Trump—it seems that they are not to be relied upon.

The US is a very strong friend and partner of this country, and we will continue to aim to maintain very good relations. We will of course take a hard-headed approach; we will not simply do deals on the expression of good will. These negotiations will be hard-headed, and they will take some time.