British metal business faces ‘existential menace’ as EU hikes tariffs to 50%

Britain’s beleaguered steel industry is facing an ‘existential threat’ after the European Union announced plans to hike tariffs on imports to 50 per cent.

The measure could be even more damaging than Donald Trump’s tariffs as Europe accounts for more than three quarters of the UK’s steel exports – compared to just 7 per cent for the US.

Gareth Stace, director general of industry body UK Steel, said: ‘This is perhaps the biggest crisis the UK steel industry has ever faced.’

The announcement comes despite Keir Starmer’s attempt to ‘reset’ relations with Brussels by making major concessions in areas such as fishing and youth migration.

And it represents a bitter blow for an industry already reeling from a series of crises – from the threat of cheap Chinese steel to the pain of high energy prices and the chaos caused by Mr Trump’s trade war.

The turmoil has already prompted the government to bail out Tata Steel’s Port Talbot plant in south Wales and take Scunthorpe-based British Steel into public control.

Brussels is acting to hike tariffs because of the flood of cheap steel imports from the likes of China and Turkey. The problem has increased as Trump’s tariffs mean vast quantities of steel that would previously have been sold to the US is being diverted to Europe.

But the EU’s decision to hike its own tariffs also threatens to have a devastating impact on Britain.

Under current post-Brexit arrangements, the UK can sell steel to Europe tariff free up to a certain level, or quota. Above that, tariffs of 25 per cent apply.

Now, Brussels is looking to bring down that quota, meaning UK exports are more likely to be caught by the charges. And the tariff rate will be doubled to 50pc.

Industry insiders hope the announcement will prove a starting point for negotiations and that Britain will be able to achieve a carve-out.

But it represents another period of uncertainty ahead for the industry.

Last year, 78 per cent of the UK’s steel exports – or 1.9 million tonnes – was sold to the EU.

Mr Stace of UK Steel said the government ‘must go all out’ to secure a deal for the UK ‘or potentially face disaster’. And he said the UK must now put in place its own measures to defend against a flood of cheap imports.

‘The probability of the EU’s measures redirecting millions of tonnes of steel towards the UK could be terminal for many of our remaining steel companies,’ he said.

Alasdair McDiarmid, Assistant General Secretary at steelworkers’ union Community, said: ‘The new measures proposed by the EU represent an existential threat to our industry, as well as the thousands of jobs and communities it supports right across the country.

‘We know that ministers will be acutely aware of the grave risks the EU’s proposal poses. It is vital that the government moves swiftly to negotiate preferential treatment for the UK, including through country-specific quotas.’

Emily Sawicz, senior analyst at accountancy firm RSM UK, said the renewed uncertainty ‘will create a ripple effect across other industries including construction, automotive, real estate and energy, all of which rely on stable supply chains and access to raw materials’.

She added: ‘Manufacturers have already weathered the storm of US tariffs, but given the value of UK steel exports to the EU market, this will have a far greater impact.

‘The sector is already grappling with energy costs that are roughly 50 per cent higher than EU averages, while continuing to face competition from Chinese exports flooding the global market.

‘Without guaranteed access to the EU and robust domestic protections, UK steelmakers risk becoming uncompetitive in an industry that is increasingly reliant on government support.’