UK to cut steel import quotas, raise tariffs to protect domestic industry

By William James

LONDON, March 19 (Reuters) - 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-industrialisation 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 follows recent increases in the United States and proposals by the European Union, against a backdrop of heightened global trade tensions as U.S. President Donald Trump uses trade measures to further his "America First" agenda.

Both the EU and United States have also raised tariffs on steel outside quotas to 50%, though Britain has secured a lower U.S. tariff of 25%.

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.

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.

The government said it would work with the EU to tackle global steel challenges, amid ongoing oversupply from China.

"The UK is not the EU's problem when it comes to steel, and the EU is not the UK's problem when it comes to steel," trade minister Chris Bryant told reporters on the sidelines of a conference at Chatham House.

"So it would be daft if we didn't end up with some kind of agreement between the EU and the UK around either the quota that we allow each other, or some kind of exemption."

($1 = 0.7502 pounds)