UK Steel calls for TRQ review, changes
Industry association UK Steel has submitted an application for a safeguard tariff rate quota (TRQ) review, claiming a change in circumstances, Kallanish learns.
UK Steel says it is submitting the application on behalf of its members, and there are several factors to justify a TRQ review, which can be requested if there is a change in circumstances.
The first being the reintroduction of US tariffs, including on the UK, which will have direct and indirect impacts on the domestic market, with a significant proportion of trade likely to be diverted to other export markets. This will still be the case even if the UK was able to secure an exemption for its own direct exports to the US. The likelihood of trade diversion is further amplified by the EU amendments to its own safeguards.
Amid the tariffs, there is weak demand in the UK and globally, with domestic demand remaining below pre-pandemic levels. Meanwhile, UK safeguard quotas have been liberalised year after year, first by 5% after their introduction and then by 3% yearly since, UK Steel points out.
“We now have quotas that are 22% larger than what the 2015-2017 import levels would have resulted in and these are due to be liberalised by a further 3% in July 2025,” it notes, adding the current safeguards do not offer adequate protection.
It also adds that certain UK safeguard product categories that have larger residual quotas are additionally exposed to diverted trade. These are categories 4, 7 and 13. These are also categories where the residual quota is dominated by a single importing country crowding out other suppliers.
The association proposes the TRQs should be reduced or at a minimum not be further liberalised in July, with UK Steel saying this is happening by default relative to demand. If liberalisation is necessary, this should be done by a nominal amount, for example 0.1%, like the EU has done, so that safeguards are not undermined. It adds the reversal of the redistribution of Russian and Belarussian quota volumes should also be considered.
Carry-over quotas from each quarter should no longer be available in the next quarter, while individual country caps of 15% should be introduced under residual quotas for categories 4, 7 and 13, it says. This is necessary to prevent the crowding out of other origins.
The application highlights there are no WTO definitions of “developed” and “developing” countries, and therefore these exceptions should be revoked for countries that are not “developing” in a steel context. UK Steel submits that China, India, Turkey, Brazil and Vietnam should not be considered developing countries for the purposes of steel safeguards.
Carrie Bone UK
UK Steel calls Trump’s tariff proposal ‘deeply disappointing’
Industry association UK Steel says it is “deeply disappointing” that US President Donald Trump is targeting the UK with an additional 25% tariff on steel imports, Kallanish notes from its statement.
It remains unclear whether this will cancel all or some of the previous arrangements on existing Section 232 measures, the association adds. Until now, customers in the US could also apply for product-specific exemptions for tariff-free imports of products not made in the US.
UK Steel director general Gareth Stace says: “It is deeply disappointing if President Trump sees the need to target UK steel, given our relatively small production volumes compared to major steel nations. The UK produces world-leading steel, supplying the US with high-quality products for defence, aerospace, stainless, and other critical sectors, materials that simply cannot be replicated elsewhere.”
The association also notes fears of excess steel capacity being re-directed to other markets such as the UK. Without strong trade shields, unfairly priced imports could undermine domestic steelmakers and threaten the long-term viability of the industry, it adds.
“The imposition of US tariffs on UK steel would be a devastating blow to our industry. The US is our second largest export market after the EU. At a time of shrinking demand and high costs, rising protectionism globally, particularly in the US, will stifle our exports and damage over £400 million [$496m] worth of the steel sector’s contribution to the UK’s balance of trade,” Stace says.
“At the same time, the introduction of further US tariffs will inevitably divert global trade flows, with excess steel potentially redirected to the UK market. This reinforces the urgent need for watertight UK trade measures in 2026 to prevent surges in imports following the UK’s steel safeguards expiry. Accelerating the UK’s CBAM to 2026 would provide an additional layer of protection against unfairly priced steel. The UK Government must act decisively to shield our domestic industry from the fallout of rising global protectionism,” Stace concludes.
Carrie Bone UK
UK industry groups flag government policy risk
Industry association UK Steel has joined other energy-intensive industry trade associations in signing an open letter to the government detailing the risks of certain policy impacts on their respective sectors, Kallanish learns.
The letter to Sarah Jones, Minister of State for the Department for Business and Trade, was spearheaded by Arjan Geveke, director of the Energy Intensive Users Group (EIUG). As well as UK Steel, other signatories includes those from the glass and ceramics sectors, chemicals and refineries, paper and mineral sectors, as well as the GMB Union.
It says while they support the government’s ambitions to boost economic growth and meet the Net Zero target, their ability to invest in decarbonisation technologies is held back by relatively high electricity costs, policy uncertainty and risk of carbon leakage. This has often made investment in the UK uncompetitive.
It notes the UK currently has higher industrial energy costs than in Europe, the US and Asia. This is something UK Steel has flagged repeatedly, calling on the government to increase the rate of compensation for network charges from 60% to 90% to bring UK network charges closer to those in key European countries.
The letter also notes that security of energy supply is critical but the rise of “intermittent technologies”, such as renewables, generating electricity and changes in geo-political circumstances, has increased risk.
Meanwhile, it also says the UK’s Carbon Border Adjustment Mechanism (CBAM) needs significant improvement to make it effective and without loopholes. Its 2027 implementation risks trade barriers and trade diversion with the EU when the bloc’s CBAM starts in 2026.
“The 12-month gap could see detrimental impacts, as higher-carbon products that would have been imported to the EU risk being diverted to the UK instead,” it says.
If the government will not bring CBAM forward to 2026, it asks it to prepare mitigation measures, particularly around trade remedies. It also wants to ensure carbon leakage policy addresses both import and export risks.
The NESO Clean Power 2030 report includes a central estimate for gas price at 101p/therm and an ETS price assumption of £142/tonne, as well as an additional £25/tonne tariff for fossil-generated power to disincentivise exports of unabated power.
“Energy intensive industries will not be able to bear these carbon costs as long as there is no effective UK CBAM without loopholes and there are no commercial decarbonisation technologies available,” the letter states.
It also expresses concern over NESO’s proposed approach to fast-tracking grid connection for Clean Power 2030 which prioritises connecting low carbon power over industrial decarbonisation projects. It calls for industrial decarbonisation to be given the same priority as electricity decarbonisation in terms of network connections.
Carrie Bone UK
UK government launches industry-backed steel council
The UK government has launched a steel council as part of its new strategy to support the struggling sector, Kallanish learns.
The council will be led by business secretary Jonathan Reynolds and chair of the Materials Processing Institute Jon Bolton. Its members include steel producers British Steel, Tata Steel, Liberty Steel, Celsa Steel and Marcegaglia. Also on board are the British Metals Recycling Association, and trade unions Community and GMB, in addition to other industry experts and ministers from the devolved nations.
The government says this demonstrates its partnership with the sector to revitalise UK steelmaking and secure economic growth.
The steel council will advise on the upcoming steel strategy, enable collaboration across the sector and its supply chains, and identify how to distribute the £2.5 billion ($3.13 billion) National Wealth Fund.
Jonathan Reynolds says: “The industry and steel communities have had enough of lurching from crisis to crisis – this government will take the action needed to place steel on a secure footing for the long term. Steel was a neglected industry in this country under the previous government.”
“A vibrant steel sector is crucial for economic growth and our national security, and by reflecting views from industry across the UK as we bring forward our Steel Strategy we’re delivering on the Plan for Change and boosting economic stability,” he adds.
Industry association UK Steel, which is also a member of the council, welcomed the move saying that “hope is on the horizon”. The steel strategy will serve as the blueprint for a revitalised and competitive steel industry in the UK, it adds.
It notes this requires competitive electricity prices, bold trade policies, addressing global overcapacity and strategic public procurement policies. Also needed is a robust CBAM, new policies on scrap and raw materials and investment in innovation.
Gareth Stace, director general of UK Steel, says: “The establishment of the steel council marks a defining moment for the future of steelmaking in Britain. The council represents a crucial step towards creating a comprehensive government steel strategy – one that lays the foundations for a sustainable and resilient industry.”
“This strategy is a once-in-a-generation opportunity to foster a competitive business environment that encourages long-term investment and ensures steelmaking remains at the heart of the UK economy,” he adds.
Carrie Bone UK
UK Steel calls for additional protection from overcapacity
Industry association UK Steel is warning the domestic market could be exposed to excess capacity if existing safeguards were to lapse, Kallanish notes.
The Steel Trade Beyond 2026 report says that excess steel capacity worldwide, built due to non-market forces such as state subsidies, could cancel out UK investments if not tackled with new trade policies. Global steel excess capacity in 2023 was estimated at 543 million tonnes.
Steel demand in China is also weakening, and the country is expected to export 100mt this year, causing supply to spill over into other markets and dampen steel prices.
The average profitability of the steel sector is currently the lowest in a decade, according to the report, with producers in developed economies losing market share to underpriced imports.
The import share in the UK has jumped to 68% so far in 2024, from 60% in 2023 and 55% in 2022, with just 40% of the UK’s yearly demand requirements being fulfilled by domestic supply.
The association notes that while the UK government is investing seriously in building the UK steel industry, addressing excess capacity and fair competition should be a fundamental element of the upcoming Steel Strategy.
UK Steel director general Gareth Stace says: “A raft of distortive subsidies is leading to oversupply which is met with rising protectionism and trade diversion.”
The report adds that safeguards which have been shielding the UK sector from trade diversion, will have to expire in 2026 due to WTO rules, and action must be taken urgently ahead of existing protection lapsing in 21 months’ time.
There are fears that growing trade protectionism by other countries could result in trade flows being directed at markets left exposed, with the UK government now needing to go further than it has before. The US continues to add additional tariffs on Chinese imports, as has Canada.
It recommends the government explores trade policy options, including ones that make use of WTO exceptions, in the context of actions taken by other WTO members which could include tariff-rate quotas.
Additionally, it should seek to play an active role in international initiatives such as the Global Arrangement on Sustainable Steel and Aluminium currently being negotiated between the US and EU.
Other recommendations include reviewing the UK trade remedies framework to make it more accessible to industry, and strengthen carbon leakage and public procurement policies to counter the impact of excess capacity on UK producer market share.
Stace adds that excess capacity has the potential to redraw the map of global steelmaking as there is no longer fair competition.
The report also notes that capacity growth in Southeast Asia and the Middle East has been largely state-funded and for high-emission blast furnaces. Over two thirds of the steelmaking capacity is in countries that have net zero targets later than 2060 or none at all.
Carbon-intensive blast furnaces account for more than 74% of capacity additions in Asia, while 89% of blast furnace energy input globally comes from coal.
“Failing to tackle the issue head-on could see British steelmakers continue to lose market share and mean that investments in decarbonisation are all for naught. So far, steel safeguards have offered a necessary shield but their expiry in 2026 could see industry faced with a cliff edge,” Stace concludes.
Carrie Bone UK
