The UK government’s publication Wednesday of a list of zeroed or reduced import tariffs for steel and metals in the case of a no-deal Brexit — a bid to soften the blow of a no-deal scenario — gained negative or little reaction from the UK automotive and steel sectors, and a guarded reaction from European aluminum.
More than anything, the list — designed to be valid for a year and only in the case of a no-deal Brexit — has heightened confusion in sectors already grappling with many uncertainties about how and when the UK will leave the European Union.
According to the list, tariffs on imports of base metals, excluding aluminum, will be reduced to 0% from 1.8%. Aluminum will be cut from 6.3% to 0%, with steel and iron dropping from 0.8% to 0%.
In a statement, the Department of Business, Energy and Industrial Strategy said that the UK’s temporary tariff regime for a no-deal Brexit, is “designed to minimize costs to business and consumers while protecting vulnerable industries. The regime would be temporary, and the government would closely monitor the effects of the tariffs on the UK economy. It would apply for up to 12 months, while a full consultation and review on a permanent approach to tariffs is undertaken.”
Businesses would not pay customs duties on the majority of goods when importing into the UK if the UK leaves the EU without an agreement, the department said. Most-favored-nation tariffs will remain in place for all products that have a trade remedy in force and are due to be transitioned over in the event of a no-deal exit, it added.
Little change in steel
In steel, the initial reaction was that not much has changed. UK Steel, the trade association for the UK steel industry, did not publicly comment on the issue, considering it does not impact directly or substantially on the sector. Standard customs tariffs for steel products (i.e. not antidumping duties) were already at zero, the association pointed out, a position reiterated by London-based International Steel Trade Association ISTA.
An ArcelorMittal spokesman said the percentage of group sales in the UK is very small so Brexit has minimal direct impact. Tata Steel Europe said “it would have little or no effect,” and Liberty House declined to comment.
Safeguard measures in doubt
The UK government stated in late February that if it strikes a withdrawal deal with the European Union, it will be able to enforce safeguards on steel imports from third countries into the UK, in line with those formally introduced by the European Commission in early February in response to the US steel import tariff hikes under Section 232.
UK Steel, the trade association for the UK steel industry, said at the time it “warmly welcomed” this move, allowing 15 steel antidumping tariffs considered “crucial to UK steel producers’… future competitiveness” to be transitioned over for use by the UK.
However, a lawyer contacted by S&P Global Platts Wednesday clarified that these antidumping measures cannot be transposed to the UK in the case of a no-deal Brexit. “In case of no deal, any AD duties will have to be imposed from scratch following a formal investigation,” the lawyer said.
A spokesman for the European Steel Association Eurofer said: “The straight-up tariff isn’t a particularly large issue — the percentages are very small. The indirect effects on items produced with steel that do face a tariff, such as automobiles and parts that cross the border in existing supply chains, is likely to be much more of a challenge to predict and manage.”
In 2018, the value of imports of iron, steel, aluminum and other base metals into the UK totaled GBP3.5 billion, according to the UK Department of Trade. Of this, GBP1.49 billion was iron and steel, GBP1.4 billion was aluminum and aluminum products, and GBP606.14 million was base metals and base metal products.
(Tomorrow: downstream and foreign players weigh in)
— Annalisa Villa, Diana Kinch, Ben Kilbey and Mayumi Watanabe