UK industry associations have welcomed the US decision to eliminate the 25% import tariff on imports of UK steel and aluminum as part of a landmark bilateral free trade agreement announced May 8.
The agreement, unveiled in separate statements from the US and UK governments, is expected to provide a welcome boost for the UK metals industry, which continues to suffer from low margins arising from weak demand, high production costs and a highly competitive import market.
In a statement released shortly after the agreement was announced, UK Steel commended the UK government for its perseverance in securing an agreement that allows for the resumption of UK steel exports to the US.
According to UK Steel, the UK exported around 180,000 mt of semi-finished and finished steel to the US, representing approximately 7% of the UK’s total steel exports.
While acknowledging that the removal of tariffs offers some welcome respite for the industry, UK Steel warned that US tariffs on the rest of the world still represented a threat to UK steel producers through potential trade diversion and heightened import pressure.
“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, said UK Steel’s director general, Gareth Stace.
“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,” he said.
The UK Aluminium Federation, or ALFED, also welcomed the US-UK trade agreement, describing it as “an important moment for UK aluminum producers.”
According to customs data, the UK exported around 7,100 mt of semi-finished and finished aluminum products to the US in 2024, representing approximately 3% of the UK’s global export total.
Acknowledging that the agreement offers greater certainty for the UK aluminum industry, as well as downstream important industries such as automotive and aerospace, ALFED warned that aluminum producers continue to face ongoing headwinds, including high energy costs and tightening emissions regulations.
ALFED noted the ongoing impact of the US tariffs on the UK aluminum recycling industry, with higher US demand for imported aluminum scrap serving to drive up UK domestic prices while undermining the country’s ability to retain high-quality secondary material for remelting and reuse.
“This ‘scrap leakage’ weakens the foundations of a viable circular economy and risks placing further pressure on UK decarbonisation goals,” the statement said.
Market participants surveyed by Platts said they saw little immediate impact from the agreement on aluminum prices, noting that UK exports to the US are modest relative to global trade volumes.
“The UK isn’t a big player, so I don’t think there will be any immediate impact on premiums,” said a trader.
Despite the limited impact, market participants acknowledged that the US-UK trade agreement raises the prospect of similar US trade agreements being announced within the coming weeks.
“It has made people question who else might get an [aluminum] exemption, as there had been so many comments that any exemptions would undermine the whole US tariff strategy,” the same trader said.
Another trader said it demonstrated that aluminum exemptions “are on the table for the US.”
Further downstream, Mike Hawes, CEO of the UK Society of Motor Manufacturers & Traders, described the free trade agreement as “great news for the industry and consumers.”
Hawes said the reduction of US tariffs on UK cars from 27.5% to 10% across a set quota of 100,000 vehicles would provide much-needed relief for the UK auto industry.
“We hope that [the agreement] will lead to broader and deeper cooperation that reduces barriers to trade still further, charting a path to economic growth for both nations,” he said.
Platts, part of S&P Global Commodity Insights, assessed UK steel hot-rolled coil at GBP535/mt DDP West Midlands on May 8, stable week over week.
Author Euan Sadden
