US Steel Import Tariffs

13:18:00

(Urgent Question): To ask the Secretary of State for Business and Trade if he will make a statement on US steel import tariffs.

We have seen the proclamation issued by President Trump overnight, which enforces a full return to 25% tariffs on US steel imports on 12 March 2025. The US has so far published details only on steel, not on aluminium. The intended effect of the proclamation is to revoke existing arrangements that have avoided those tariffs, such as the UK-US resolution, as well as any separately agreed product exclusions from the tariffs. What British industry needs and deserves is not a knee-jerk reaction but a cool and clear-headed sense of the UK’s national interest, based on a full assessment of all the implications of US actions. The Minister of State for Industry is meeting representatives of the steel industry and trade unions this very afternoon, and the Secretary of State for Business and Trade is in touch with representatives of the British steel industry and will meet them in the next 24 hours. Since July, we have engaged in a systematic way with the UK steel sector, and we will continue to engage with UK industries impacted by potential tariffs. Historically, we have benefited from a strong and balanced trade relationship with the United States—worth around £300 billion and supporting millions of jobs. In trade policy, we stand ready to work with President Trump to find solutions that work for both the United Kingdom and the United States.

The United States is our greatest ally and our greatest single trading partner. The UK and the United States are the biggest investors in each other’s economies. Yet this is a moment of great peril for the UK steel industry, because the Government have failed to engage with gusto with the new US Administration. The Prime Minister has not, despite his many air miles, got on a flight to the States at the first possible opportunity, and years of student politics-style insults hurled at the President by Government Front Benchers has put our relationship in jeopardy. And that was before the embarrassment of the Chagos islands situation showed that we have terrible negotiators running the country. Can the Minister confirm what conversations he or the Secretary of State have had with their counterparts in the United States about steel tariffs? How many times has the Minister spoken with US trade representatives about this matter since Sunday? Will he confirm that the first 500,000 tonnes of steel to the US will be tariff-free, as they were under President Trump’s previous Administration? What economic analysis has the Department produced on the impact of the tariffs on jobs and on the wider UK economy, and what plans do the Government have to reciprocate with tariffs on US steel and aluminium, or on any other US goods? What are the Minister’s plans for the safeguarding measures against steel dumping, which expire in June? We on the Conservative Benches have been calling on the Government to strain every sinew for a trade deal with the United States. Much work was done by the Department last time President Trump was in the White House. Will the Minister finally set out what plans the Government have to obtain a big, beautiful free-trade agreement with the United States?

Well, well—let me try to answer the various questions that the shadow Minister asks. First, on the big, beautiful deal that the Conservatives contemplated, I simply observe that that was one of a whole number of trade deals that they boast about but abjectly failed to deliver. The hon. Lady described this as a moment of great peril for the UK steel industry. Frankly, we saw the UK steel industry suffer from a degree of neglect for many years under the previous Government. That is why we are the first Government in many years to set out a comprehensive steel strategy, including a commitment of £2.5 billion towards the future of the steel industry. We will take no lectures from Conservative Front Benchers on the UK steel industry. On the hon. Lady’s substantive question about the degree of contact that we have had with the US trade representative, it may have eluded her attention that we do not yet have a confirmed US trade representative. We anticipate that Jamieson Greer will be confirmed by the US Senate in the next couple of weeks. Similarly, she might suggest that it is important for the Secretary of State to meet Howard Lutnick, the US Secretary of Commerce, but, alas, I must inform her that Howard Lutnick has not yet been confirmed. We stand ready to engage with the incoming Administration—be that with the USTR or the Secretary of Commerce—once we are in a position to do so. In terms of the economic analysis, I hope the hon. Lady will understand, given how sensitive these issues are as we anticipate the further steps to be taken by the Trump Administration, that it would not be an altogether wise negotiating strategy to share the detail of the internal UK analysis of the potential effects of tariffs, which, I remind the House, are not due to be imposed until 12 March.

I call the Chair of the Business and Trade Committee.

What is essential now is that this does not escalate. Widespread duties on UK exports to the US would be devastating for economic growth, bad for inflation and bad for interest rates. The whole House ought to wish His Majesty’s new ambassador, Lord Mandelson, the very best of luck in the conduct of his new tasks in Washington. What flexibility will the Minister allow on increasing funding to UK steelmakers through the steel strategy if they confirm that that is essential to maintain a sovereign capability in this country?

I am grateful to my right hon. Friend for his generous words about the incoming UK ambassador to Washington, who—notwithstanding his commitment at the weekend to fly under the radar—is already in post and is making necessary calls. He is but one of the key interlocutors we have established with the incoming Administration, and—reflecting the earlier questions that we were asked—we are already actively engaged with the US Administration. More broadly on the approach to the UK steel industry, my friend and colleague the Minister of State for Industry is this afternoon meeting representatives of the steelmaking trade unions and representatives of the principal steel companies in the United Kingdom. The Secretary of State will further that dialogue in the next 24 hours. There has already been outreach to the UK Steel trade body. In relation to the commitment for the steel strategy that we are due to unveil in the spring, I can assure my right hon. Friend that there is already a very active dialogue that will incorporate issues related not just to potential tariffs but to the risks of trade diversion, and to the substantive issues that he raises.

I call the Liberal Democrat spokesperson.

Donald Trump’s tariffs will cause much uncertainty across the world, not least for those working in our great British steel industry. Tariffs are not just bad news for UK steel producers; they would have a tangible effect on people’s lives, from lower economic growth to higher inflation. It is not likely to end with steel, so we may well be caught up in America’s economic vandalism. Will the Minister set out how US tariffs may affect the UK economy and what preparations are being made as a result, and does he agree that British jobs are on the line and that businesses and workers want to see the Government stand up for them?

To give a sense of quantum to the House, about £400 million-worth of UK steel exports go to the United States. That represents, if I recollect accurately, about 10% of UK production, so the hon. Gentleman is entirely right to recognise that this is a significant moment.[Official Report, 12 February 2025; Vol. 762, c. 6WC.] (Correction) We take that very seriously, which is why we are engaging in dialogue with both the workforce and the owners of the various steel producers here in the United Kingdom. More broadly, as my right hon. Friend the Member for Birmingham Hodge Hill and Solihull North (Liam Byrne) alluded to, we want to avoid a significant escalation. We saw retaliatory measures taken under the first Trump Administration. It feels to me that this is an opportunity for the UK to exercise a cool head and a clear-eyed sense of where the national interest lies. These tariffs will not be imposed until 12 March, which gives us time to undertake the dialogue that is already under way, to reach a judgment on the basis of the analysis that we have already done, and to ensure that our interlocuters in Washington and elsewhere are engaged in a constructive and mature dialogue.

It is quite evident that tariffs will have a negative impact on the UK economy. Among all the palaver in the imposition of tariffs, the impact on workers—on their jobs and livelihoods—is often forgotten. In formulating a response to the proposed tariffs, I ask that we work closely with trade union representatives to ensure that the workers are not forgotten in all of this.

I am happy to give that assurance. I should probably declare an interest as a member of the Community trade union. I can assure the House that trade unions—whether Community, the GMB, Unite or the other representatives of steelworkers—have been a central part of the dialogue that we started in July. Frankly, we inherited a situation in which there had been significant under-investment in steel capability in the United Kingdom for many years. We are backing up that commitment to dialogue with an act of commitment to public funds, and we are doing so in dialogue with the workforce as well as with the companies themselves.

The Minister is quite right that we do not want a knee-jerk reaction, but I gently point out to him that this announcement should not have come as a surprise, bearing in mind the President’s comments both before and after the inauguration. Many of my constituents who work at the Scunthorpe steelworks already face an uncertain future, and this will just increase their concerns. Can the Minister give an assurance that he will report back to the House as soon as possible about the meetings that will take place over the next day or two?

There are plenty of opportunities for Ministers to be held accountable in relation to the dialogue that we have started, and that we continue, with steel producers in the United Kingdom. Turning to the hon. Gentleman’s initial point about whether this announcement has come as a surprise, candidly, it has not. However, it is also fair to recognise that the new President has a speciality in generating uncertainty—part of his style of negotiations is creating uncertainty as to what will happen next. As I sought to suggest in my opening answers, we have answers on steel today, but the proclamation that emerged overnight did not give us answers on aluminium. In those circumstances, it is right and reasonable to be mindful of the statements that have been made, which I can assure the House that we were, and to undertake analysis, which I can assure the House we are also continuing to review and reach a judgment on. At the same time, we should recognise that the date on which these tariffs come into effect is 12 March. As a consequence, there is a window of opportunity to not only engage with the workforce and the companies to ensure that we better understand exactly what they are looking for in light of these specific measures, but critically, to engage directly with the Trump Administration. That is work to which our ambassador is already turning his mind.

Let us not forget that steel is a strategically important industry, both for our economy and our national security, and if other countries are going to be protecting their steel industry, our Government must not be afraid to make the big fiscal choices required to protect our own. Will the Minister assure the House that responding to these tariffs will be a priority for this Government, as will putting the industry on a sure footing in the years ahead?

In terms of being willing to make the big fiscal choices, we have committed £2.5 billion of public money since July to support the steel industry, with resources being funnelled in part through the national wealth fund. I can assure my hon. Friend that we have already been willing to put money, as well as commitment, behind the steel industry. He is absolutely right to recognise the strategic significance of this industry, not just on its own terms but much more broadly to the manufacturing capability of the United Kingdom. He has alluded to the risk of trade diversion, given the potential remedial action taken by other trading blocs, so I also want to assure him that we have protections that will remain in place until 2026. There are safeguards in place in relation to trade diversion, as well as the UK’s ability to act independently.

I have listened very carefully to what has been said this morning. We have known since November that this was coming, even though the press were saying that we would somehow get a special relationship. What is clear today is that Trump shows strength towards countries that are in a position of weakness, which is where the UK currently is. Is it not now time for this Government to think very seriously about being back in the EU, where there is strength against strength through the customs union and the single market? We do not know what else is coming down the line, and Scottish businesses need to know the future—it could be whisky, it could be fish or it could be manufacturing. Can the Minister give us some assurance about how he will stand up to the strength of global protectionism?

In terms of an understanding of Scottish business, again I should probably declare an interest, given that the Glenkinchie distillery is in the Lothian East constituency. Only this morning, I met with Chivas Regal and Diageo, so I can assure the hon. Gentleman that I am fully aware. Certainly, no one party should claim to speak for Scotland, or for Scotland’s businesses. As for the United Kingdom’s departure from the European Union, it is no secret that I was a remain campaigner and wanted the United Kingdom to stay within the European Union in 2016. I would gently point out to the hon. Gentleman that had his party been successful in its endeavour to break up the United Kingdom in 2014, the direct and immediate consequence of that choice would have been Scotland’s departure from the European Union.

In his response, the Minister mentioned the previous Conservative Government’s neglect of the steel industry—it was allowed to decline to a size smaller than the industry in Belgium. Does he agree that the UK’s market presents a great commercial opportunity for investment in steel, and that through this Government’s steel strategy, we have the opportunity to attract that investment to the UK?

I am very happy to give my hon. Friend the assurance that he seeks. We have a comprehensive plan for steel, which, sadly, we have not had in this country for a number of years. That plan is backed up by significant public resources, which again were not available under the previous Government, and we look forward to publishing a comprehensive strategy for steel in the spring of this year.

If President Trump offered to cancel the tariff on steel imports in return for the UK throwing the appalling Chagos giveaway deal in the dustbin, would the Government agree?

Tempting though it is to indulge in the hypothetical negotiating strategy ventriloquised through the right hon. Gentleman, consistent with the approach that we need to take a considered view of what is emerging—and is still emerging, in the case of aluminium—the responsible thing to do is leave those matters with the good offices of the UK’s ambassador to the United States and the Foreign Secretary.

The reality is that countries across the globe are moving towards a protectionist model, while at the same time we are still importing 68% of the steel we need. There is clearly an opportunity here for the UK. Next year, our steel safeguards come to an end, at the same time as the EU introduces its carbon border adjustment mechanism tariff protections. Does the Minister agree that we have to move at pace to replace those protections and back our steel industry in the same way that other countries are choosing to?

I can assure the House that we are determined to back our steel sector. The Minister for Industry will be at Sheffield Forgemasters tomorrow; as I say, she is meeting representatives of the steel industry today, and the Secretary of State will be meeting representatives over the next 24 hours. We have established a steel council and a comprehensive plan for steel, we have committed significant public resources, and we will publish a comprehensive strategy in the spring of this year. We take steel seriously, which, sadly, was not the case for our predecessors.

It is no secret that President Trump loves tariffs and intended to use them, and the Minister is coming across as a little complacent in his approach. Can he clarify whether any discussions have taken place with the Administration about continuing tariff-free quotas for British steel since the inauguration? Presumably, the Prime Minister did not raise that matter during his call. Does the Minister also concur that agreeing such protections is made harder by this Government’s failure to commit to spend 2.5% of GDP on defence?

It is a matter of public record that the Prime Minister has had a couple of warm exchanges with the incoming President-elect of the United States, which I think is entirely right and appropriate. We now have a new UK ambassador, and I pay due tribute to the work of Karen Pierce, his predecessor, who did an exemplary job on behalf of the United Kingdom during the period of transition. It remains an indisputable fact, however, that Howard Lutnick is not yet in office as the US Commerce Secretary, and that Jamieson Greer is not in place as the US trade representative. Those are the individuals through whom these dialogues are normally conducted.

I echo Labour Members’ support for steel as a nationally important infrastructure industry that we must protect in this country. Further to the comments of my hon. Friend the Member for Hartlepool (Mr Brash) and of my right hon. Friend the Member for Birmingham Hodge Hill and Solihull North (Liam Byrne), the Chair of the Business and Trade Committee—who is no longer in the Chamber—I also agree that we must try to avoid escalation. Part of that is about our relationship with Europe, which is our largest market for exported steel after America, so can the Minister update us on what conversations he has had with his European counterparts? This issue of CBAM is absolutely critical to the British steel industry, which is on its knees after 15 years of a Conservative Government who failed to see its value. Will he also reassure us that the resolution of the emissions trading scheme is still on the agenda for the May talks with Europe?

I can assure my hon. Friend that we are working on that EU reset, and continue to work on it, through the good offices of my new colleagues in the Cabinet Office. One element of that reset is looking at those linkages and how they can work effectively, and the level of engagement in relation to that reset is significantly ramping up. Again, frankly, there had to be almost confidence-building measures established after the deep betrayal of trust that was felt by our European friends, neighbours and allies—let us remember that a previous Conservative Prime Minister could not even bring herself to acknowledge President Macron as a friend and ally of the United Kingdom. In that sense, we have built the relationships, we have established trust, and we are looking forward with a clear-headed sense of national interest to the reset talks that are getting under way this year.

The threat to the UK steel industry is not tariffs from the US, but the cost of our electricity. The Business Secretary has previously agreed with me that that is what makes our steel industry uncompetitive, and it is why imports have grown from 55% to some 70% in the last couple of years. So will the new steel strategy, due in the next few weeks, confirm how we will get down the electricity price in this country to make our industry competitive?

I think the difficulty with the point the hon. Gentleman makes—and I appreciate his constituency interest and the broader interests of Lincolnshire in this—is that other factors need to be recognised and addressed in the steel strategy. There is again, for example, the indisputable fact that we inherited blast furnaces that were increasingly out of date relative to technologies being used elsewhere. There had also been years of neglect in a number of plants in which there is a significant need for both public and private investment. So I respectfully hear the point that the hon. Gentleman makes about electricity prices and general power generation prices in the United Kingdom. The challenge of energy prices is not unique to the United Kingdom, but is felt across the whole of the continent of Europe. However, there are other factors that we are going to have to address as part of a comprehensive plan for steel.

I commend the Minister and the Government for their work on the steel strategy so far, but these are anxious times. British steel is a byword for British pride in our communities, jobs and the products we produce. I am worried not just about the exports, but about some of the steel dumping, on which we have had conversations, given our need to get growing as an economy. Does the Minister recognise not just that this is an issue for the communities that many hon. Members represent, but that it is an issue of national pride in places such as Peterborough and the country as a whole that we get this right?

My hon. Friend is a doughty defender of the interests of Peterborough and of his constituents, and he is right to recognise that pride in steel making extends beyond Port Talbot, Scunthorpe, historically Motherwell and other locations of significant steel capability. On the specific point he raises, of course there remains a residual power available to individual companies under the Trade Remedies Authority to take action on dumping perceived to be happening. However, I reassure the House that the UK’s steel safeguards do and will remain in place until the end of June 2026, and I hope that offers him some comfort.

The attacks on the last Conservative Government might carry more weight if this Government were not planning to equalise our carbon price with the European carbon price, but that is by the by. Given the conduct of China over the years, measures to hold down production costs in other countries and now President Trump’s tariffs, will the Minister accept that, if international free trade was not always a myth, it certainly is dead today, and will he commit to abandoning the theories and policies that follow his logic? Comparative advantage is used as intellectual cover for outsourcing production jobs and prosperity to countries that cheat the system. So can we see some trade realism and a strategy—a real strategy—to cut industrial energy costs, keep us making virgin steel, and get us manufacturing and exporting more?

If the hon. Gentleman has an appetite for trade realism, let us get real: the Prime Minister for whom he worked failed to do a US-UK trade deal. Let us also get real about the fact that the central underpinnings of the party of which he is a member at the time of the Brexit referendum—that we were in a less protectionist world, that we would have a functioning World Trade Organisation system and, indeed, that we would have major trading blocs seeking to take barriers down rather than put barriers up—have all been misplaced. His leader, the now Leader of the Opposition, generously conceded a couple of weeks ago that there was no growth plan following the United Kingdom’s exit from the EU. It is for this Government to clean up the mess that his Government left.

Under WTO rules, any country can impose tariffs when it believes there is unfair subsidy of the exports presented by the other country, but so far I have not heard America put forward any argument that there is unfair subsidy of our steel industry. What discussions is the Minister having with the WTO about this?

I can assure my hon. Friend that we are in regular dialogue with the WTO. I was in touch only this morning with Simon Manley, our exemplary British ambassador in Geneva. We were also very clear at an early stage—since July—that we were backing Ngozi Okonjo-Iweala as the next director general of the WTO. I had the great privilege of working with Ngozi when I was the UK governor of the World Bank during a previous era of Labour Government. The UK is committed to standing behind her exemplary leadership of the WTO at an admittedly very challenging time for global trade.

To use football parlance, President Trump is playing a blinder with his tariffs strategy. Canada, Mexico and Colombia all fell into line when he threatened tariffs. Only the EU is foolishly saying that it wants to go toe to toe with him. Can the Minister assure us that our Government, using our Brexit freedoms, will put Britain first when it comes to this issue, and that we will not side with the EU, but will work with the American Administration to protect British jobs and British industry?

While I may not agree with that characterisation of the efficacy of the US President’s actions in recent weeks, it is a matter of record that we stand ready to work with the United States to broaden and deepen our trading and economic relationship. We are significant investors in each other’s countries, and that trading relationship matters. The previous Government abjectly failed to secure the trade deal that they promised—the big promise at the time of the Brexit referendum—but with a clear sense of the national interest, and a willingness to engage with open minds, we are ready to have this conversation with the United States.

I thank the Minister very much for his answers. The time is coming, and I hope we will have better news for the future. President Trump has been very clear that he wishes to work with the United Kingdom of Great Britain and Northern Ireland, and to build on the friendship that already exists, but he is also clear that America comes first. He is a businessman, and we have to acknowledge that. What consideration has been given to addressing the tariff issue with him, and to securing a deal for our businesses? He has made it clear that he is prepared to give and take, and we have much to offer in this very special relationship that we both savour.

If one observes the comments made by the Chancellor last night, or by the incoming British ambassador in Washington, it is clear that we are ready to engage in a thoughtful, pragmatic way with the new Administration in Washington, and we want to broaden and deepen the trading relationship. I observe that under the first Trump presidency, bilateral trade between the United States and the United Kingdom increased, and we have ambitions to see that continue.

I thank the Minister for his responses.