A government source has expressed confidence that a deal can be struck to protect Tata Steel, but acknowledged that the negotiations are “complex”
Ministers are reportedly working to ensure that Tata Steel, the UK’s largest steelmaker, is not excluded from tariff-free access to the US market under the trade deal negotiated between Keir Starmer and Donald Trump. The prime minister announced on Wednesday that he hopes the deal, which has been agreed upon but not yet signed, will come into effect “in just a couple of weeks.” This follows the US president’s decision to pause 50% tariffs on British steel and aluminium products for five weeks.
However, there are concerns that Tata Steel, which operates the vast Port Talbot steelworks in south Wales, could be left out of the deal due to the origin of some of its products. The company, which exports over $100m worth of goods to the US market annually, fears that its operations may breach US import rules. These rules require all steel to be “melted and poured” in the country from which it is imported.
Tata Steel shut down its blast furnace at Port Talbot last year as part of its transition to a greener electric arc furnace. During this transition, the company has imported steel from its sister companies in India and Europe to meet customer demands. This practice could potentially violate the US import rules, leading to concerns about Tata Steel’s exclusion from the trade deal.
UK negotiators have been actively working to secure a carve-out for Tata Steel. A government source has expressed confidence that a deal can be struck to protect Tata Steel, but acknowledged that the negotiations are “complex.”
The UK government has also faced pressure from the US over British Steel, which is owned by the Chinese Jingye group. In April, the government used emergency legislation to take control of the Scunthorpe site amid fears that the Chinese company planned to let its blast furnaces run cold. US representatives are reportedly concerned that Chinese involvement in British Steel could allow Beijing to use the company as a “back door” into the US for Chinese products.
This week, the US doubled tariffs on foreign steel and aluminium imports to 50%, a rate that applies to all trading partners except Britain. The rate for steel and aluminium imports from the UK will remain at 25% until at least 9 July, although the exact size of Britain’s steel quota remains unclear.
As part of the trade deal negotiated between Starmer and Trump last month, the US agreed to cut the 25% tariff rate on British steel and aluminium exports to zero. However, this agreement has not yet been finalised. Steel manufacturers have expressed concerns that delays in implementing the trade deal have resulted in lost business opportunities.
Speaking to MPs before the announcement, Russell Codling, a director at Tata Steel, highlighted the impact of tariffs on the company’s business. He stated that approximately £150m of business was affected by the tariffs. Codling emphasised the importance of enacting the deal quickly, saying, “If we can get this deal enacted as quickly as possible … it will get stability for us and for our customers in the US.”
The situation underscores the complexities and challenges faced by the UK government in navigating international trade agreements, particularly in the context of steel and aluminium industries. The potential exclusion of Tata Steel from tariff-free access to the US market highlights the need for careful negotiation and consideration of the origins of products.
As the UK continues to work towards finalising the trade deal with the US, the outcome will have significant implications for the UK’s steel industry, particularly for companies like Tata Steel and British Steel. The government’s efforts to secure a carve-out for Tata Steel reflect the importance of protecting the interests of UK-based steel manufacturers in the global market.
The coming weeks will be crucial in determining the final terms of the trade deal and its impact on the UK’s steel industry. The government’s ability to secure a favourable outcome for Tata Steel and other steel manufacturers will be closely watched by industry stakeholders and policymakers alike.
