Industry Warns of Loophole in UK Steel Trade Rules
Steel industry leaders have cautioned government officials that a "back door" loophole in recently introduced trade regulations could adversely affect British manufacturers, potentially resulting in job losses and factory shutdowns. This loophole permits a wide range of foreign pre-fabricated steel products to enter the UK without incurring import tariffs.
The exemption covers pre-made steel components such as bridge sections, columns, door frames, as well as smaller rods and tubes used in construction, according to information obtained by .
In March, government ministers announced measures aimed at protecting the UK's struggling steel sector by imposing tariffs and reducing the allowable volume of steel imports from abroad, particularly targeting cheap imports from China.
However, industry representatives argue that these measures primarily focus on imports of raw steel directly from the furnace, thereby safeguarding companies like Tata and British Steel, but leave fabricated steel products, which have already been processed, unaffected.
"The rules allow foreign pre-made steel in via a ‘back door’," said Simon Boyd, managing director of Reidsteel, a structural building parts manufacturer employing approximately 130 people.
Starting in July, quotas on many imported steel products will be reduced by 60%, and duties on imports exceeding these quotas will increase to 50%. These actions align the UK with policies in the European Union and Canada, responding to an oversupply of inexpensive steel imports from China, the world's largest steel producer.
The tariffs are anticipated to prevent the collapse of major producers such as Tata and British Steel. The steel sector, which recently underwent restructuring, employs around 10,000 individuals and supports numerous related industries.
On Monday, it was reported that officials are progressing towards finalizing a deal to secure the future of British Steel, a move welcomed by trade body UK Steel as providing "vital certainty for the workforce, the company’s customers and the wider supply chain at a critical moment."
Nevertheless, the broader network of downstream manufacturers, which convert steel into finished or fabricated products, supports an estimated 300,000 jobs. This sector is already experiencing challenges due to the conflict in Iran.
"Not only does [the loophole] undo what the government’s trying to do to protect steelmaking … but it kills the downstream customers of steelmakers in the UK off," Boyd stated. "What are you making steel for if you haven’t got a customer base?"
Trade Minister Chris Bryant was reportedly informed about the loophole during meetings with industry leaders shortly after unveiling the steel strategy on 19 March.
A senior industry participant in these discussions noted:
"[Bryant] just asked us to provide evidence of where we thought this either is or would be happening … We know people already are saying: ‘If I get it made in Asia and drill some holes in it and fabricate it then actually, it’ll be a fabricated product.’"
Even prior to the tariff announcements, contractors were exploiting the availability of inexpensive pre-made steel parts from overseas. A government-supported project, Net Zero Teesside Power, faced criticism when it was revealed that its developers purchased 7,000 tonnes of Chinese steel for £5 million in January.
The new regulations are expected to encourage similar purchasing behavior, as they will increase the cost of UK-produced steel. Last week, a leading contractor involved in the HS2 project indicated that these measures would have a negative impact on the construction sector.
Steve Morley, head of the Confederation of British Metalforming, accused government ministers of "selling out downstream manufacturers," warning of a "very real threat" of job losses and factory closures.
"The tariffs will see the price of raw material rise and availability reduce, which will make manufacturing totally uncompetitive, leaving the door open for imports of finished metal goods which will have no restrictions in terms of quotas or tariffs," Morley said.
Separately, the government’s designation of steel as critical to national security means British suppliers will be prioritized for public contracts. Government departments will be required to use UK-produced steel or provide justification for sourcing it from abroad.
A government spokesperson stated:
"Our steel strategy is protecting UK producers, with our robust new measure applying to all steel products that can be made in the UK. It will help us to produce up to 50% of our domestic demand and leave us less reliant on steel made overseas.
We engaged extensively with industry when developing this measure, we continue to engage ahead of it coming into force, and we will review it after 12 months to ensure it remains fit for purpose."
