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UK to cut steel import quotas, raise tariffs to protect domestic industry
Britain will lower its tariff-free quota on imported steel and double the tariff on imports exceeding that quota, the government said on Thursday, launching a plan to protect its small but strategically and politically sensitive steel sector.
Steelmakers have struggled to survive in the birthplace of the Industrial Revolution after decades of decline driven by long-term de-industrialization and, more recently, by high energy costs and a global glut of cheap steel.
The government will cut the amount of steel that can be imported without incurring tariffs by 60%. Imports above that new level will face a 50% tariff – twice the previous rate of 25%. The changes will come into force on July 1.
The move brings Britain’s tariff rates into line with recent increases in the United States and proposals by the European Union, against a backdrop of heightened global trade tensions as US President Donald Trump uses trade measures to further his “America First” agenda.
The British government also said that its National Wealth Fund would make up to 2.5 billion pounds ($3.33 billion) available to help finance investment in the sector and that it wanted 50% of steel used in Britain to be produced domestically, up from the current target of 30%.
“Making steel in the UK is vital for national security, critical infrastructure and the wider economy,” Business Secretary Peter Kyle said in a statement.
“With this strategy we are closing the decades-long chapter of destructive de-industrialization and committing instead to strengthening and sustaining Britain as a steel-making nation.”
Unions and industry bodies welcomed the measures.
The sector only accounted for 0.1% of UK economic output in 2024 but supported 37,000 jobs, many in heartlands of the governing Labour Party which grew from a trade union movement deeply rooted in Britain’s industrial heritage.
Two of the country’s biggest steelmakers have faced financial troubles in recent years.
Tata Steel has closed its blast furnaces at Port Talbot, while the government had to seize control of British Steel to prevent the shutdown of its Scunthorpe plant under Chinese owner Jingye, taking on huge costs in the process.
($1 = 0.7502 pounds)
(By William James; Editing by Edmund Klamann)
U.K. Bets on Tariffs to Rebuild Its Steel Industry
- The U.K. will cut tariff-free steel import quotas by 60% and impose 50% tariffs beyond limits to boost domestic output.
- The policy aims to meet 50% of national steel demand locally, backed by £2.5 billion in state support.
- Critics warn that higher costs and flawed carbon pricing rules could hurt competitiveness and investment.
The UK government has reduced steel import quotas and raised tariffs to 50 per cent outside unit limits as part of a strategy to save the industry, an “bold” move that is likely to draw criticism from economists and opposition groups.
Quotas for imports free from the higher tariffs will be reduced by 60 per cent from July. The government has set a target for domestic production to support half of steel demand in the UK.
“Making steel in the UK is vital for national security, critical infrastructure and the wider economy,” Business Secretary Peter Kyle said.
“With this strategy we are closing the decades-long chapter of destructive de-industrialisation and committing instead to strengthening and sustaining Britain as a steel-making nation.”
The move to introduce tariffs has already led to backlash from the Conservatives, with shadow business secretary Andrew Griffith hitting out at the government’s decision to introduce a new tax on businesses.
“Raising the cost of imported steel means more cost for the construction industry, less infrastructure investment, and is a further blow to the diminishing number of firms making things in the UK,” Griffith said.
“Astonishingly, almost a year on, the government seems no closer to making the Chinese owner of British Steel Scunthorpe step up to their liabilities.”
“Labour don’t understand business and these tariffs now join the list of taxes and employment red tape which are choking growth and making us all poorer.”
- The U.K. will cut tariff-free steel import quotas by 60% and impose 50% tariffs beyond limits to boost domestic output.
- The policy aims to meet 50% of national steel demand locally, backed by £2.5 billion in state support.
- Critics warn that higher costs and flawed carbon pricing rules could hurt competitiveness and investment.
The UK government has reduced steel import quotas and raised tariffs to 50 per cent outside unit limits as part of a strategy to save the industry, an “bold” move that is likely to draw criticism from economists and opposition groups.
Quotas for imports free from the higher tariffs will be reduced by 60 per cent from July. The government has set a target for domestic production to support half of steel demand in the UK.
“Making steel in the UK is vital for national security, critical infrastructure and the wider economy,” Business Secretary Peter Kyle said.
“With this strategy we are closing the decades-long chapter of destructive de-industrialisation and committing instead to strengthening and sustaining Britain as a steel-making nation.”
The move to introduce tariffs has already led to backlash from the Conservatives, with shadow business secretary Andrew Griffith hitting out at the government’s decision to introduce a new tax on businesses.
“Raising the cost of imported steel means more cost for the construction industry, less infrastructure investment, and is a further blow to the diminishing number of firms making things in the UK,” Griffith said.
“Astonishingly, almost a year on, the government seems no closer to making the Chinese owner of British Steel Scunthorpe step up to their liabilities.”
“Labour don’t understand business and these tariffs now join the list of taxes and employment red tape which are choking growth and making us all poorer.”
Steel industry’s mixed response
UK Steel, the main industry body for the sector, said the government’s reforms were “incredibly bold” but warned that a net zero pricing scheme for trade and higher energy prices could undermine businesses’ competitiveness.
Gareth Stace, the director general of UK Steel, said: “The government’s bravery in taking the required measures represents a real shift in the culture of Westminster from protecting the ideology of free trade at any cost, to defending critical industries and national security.
But an energy policy chief at the body said the government strategy’s approach to the Carbon Border Adjustment Mechanism (CBAM), which attempts to equalise net zero costs between domestic products and imports, risked “achieving precisely the opposite” of the scheme’s aim.
“As it stands, the UK CBAM could favour imported Chinese steel over steel made in the UK,” Frank Aaskov, the energy policy director at UK Steel, said.
The government is also set to finance steel production through the national Wealth Fund, with £2.5bn set to be injected into manufacturers by 2030.
Some of the cash would go towards investments in building electric arc furnaces, which the government said would “support net zero”.
It will also go towards supporting operations at Scunthorpe after the government took control of manufacturing under Chinese company Jingye Group’s ownership, with British Steel on the brink of collapse until Labour stepped in to keep blast furnaces on in April 2025.
A National Audit Office report said this week that operations were costing the Department of Business and Trade about £1.3m a day, with the government already spending £377m in nine months.
By City AM
UK Steel, the main industry body for the sector, said the government’s reforms were “incredibly bold” but warned that a net zero pricing scheme for trade and higher energy prices could undermine businesses’ competitiveness.
Gareth Stace, the director general of UK Steel, said: “The government’s bravery in taking the required measures represents a real shift in the culture of Westminster from protecting the ideology of free trade at any cost, to defending critical industries and national security.
But an energy policy chief at the body said the government strategy’s approach to the Carbon Border Adjustment Mechanism (CBAM), which attempts to equalise net zero costs between domestic products and imports, risked “achieving precisely the opposite” of the scheme’s aim.
“As it stands, the UK CBAM could favour imported Chinese steel over steel made in the UK,” Frank Aaskov, the energy policy director at UK Steel, said.
The government is also set to finance steel production through the national Wealth Fund, with £2.5bn set to be injected into manufacturers by 2030.
Some of the cash would go towards investments in building electric arc furnaces, which the government said would “support net zero”.
It will also go towards supporting operations at Scunthorpe after the government took control of manufacturing under Chinese company Jingye Group’s ownership, with British Steel on the brink of collapse until Labour stepped in to keep blast furnaces on in April 2025.
A National Audit Office report said this week that operations were costing the Department of Business and Trade about £1.3m a day, with the government already spending £377m in nine months.
By City AM
Column: China’s robust iron ore imports are going into storage, not steel
China increased imports of iron ore at the start of this year, but the extra volumes are being used to build inventories to record highs rather than lift steel production.
The increase in imports appears largely driven by softer prices for the key steel raw material, but it is also fortuitous given the potential for the fallout from the US and Israeli attacks on Iran to spread beyond energy markets.
China, which buys about three-quarters of global seaborne iron ore, saw arrivals of 210.02 million metric tons in the first two months of 2026, up 10% from the same period a year earlier, according to customs data released on March 10.
The robust start to the year came after imports hit a record monthly high of 119.65 million tons in December, which took arrivals for 2025 to an all-time annual high of 1.26 billion tons.
The strength in iron ore imports isn’t because of higher steel production, with output in the first two months dropping 3.6% from the same period in 2025 to 160.34 million tons, according to official data released on March 16.
The weaker steel production continued the trend from 2025, when annual output dropped to a seven-year low of 960.81 million tons.
Rather than being consumed by steel mills, China has been building stockpiles, with port inventories monitored by consultants SteelHome rising to 166.91 million tons in the week to March 13.
This is up 28% from the recent low of 130.1 million tons in early August and is the highest in SteelHome data going back to 2012, eclipsing the previous record of 161.98 million in June 2018.
There are several factors driving China’s strong imports of iron ore, but the primary one is likely price.
Singapore Exchange contracts had been on a declining trend since reaching a 14-month high of $108.89 a ton on January 12.
The decline in prices ended at $98.20 a ton on February 20, but it lasted long enough to boost arrivals at the start of the year and likely into March as well, with commodity analysts Kpler estimating seaborne imports of around 109 million tons.
Strong supply from top exporters Australia and Brazil in the absence of usual seasonal weather disruptions also boosted the availability of cargoes and China acts as a clearing house for any surplus iron ore.
Since the low in late February prices have shifted higher, partly in response to the conflict in the Middle East, reaching $107.10 a ton on March 17, before easing slightly to end at $106.30 on Wednesday.
Iran risks
So far the impact on iron ore flows to China from the US and Israeli war on Iran is limited to higher freight charges as the price of fuel oil soars along with prices for other oil products such as diesel and jet fuel.
But there is the potential for wider disruptions, especially if top exporter Australia and number four South Africa start to run short of diesel.
Both countries are major importers of refined products and in Australia mining accounts for about 40% of total diesel demand.
In a situation where refined fuel cargoes become hard to source at any price, Australia will have to ration fuel and prioritize food production and distribution, and emergency services.
While shutting down the mining industry would be a radical step, it would be the only option left if fuel-exporting countries limit or halt shipments, as China has already done.
For now, China is likely to continue iron ore imports at robust levels as prices aren’t yet high enough to act as a disincentive.
A further incentive to continue imports is the potential for disruption to supplies from diesel shortages, even though that is still a fairly small possibility.
(The views expressed here are those of the author, Clyde Russell, a columnist for Reuters.)
(Editing by Jacqueline Wong)
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