UK Expected to Tighten Steel Import Quotas as Global Glut Intensifies
The United Kingdom is anticipated to significantly reduce the volume of foreign steel it permits to enter the country without tariffs, as ministers seek to shield the domestic industry from a worldwide surplus and escalating protectionist measures. This strategic shift involves altering the existing quota system, which currently allows a specified quantity of steel to be imported before a substantial 25% levy is applied to any excess.
Imminent Changes to Safeguard Measures
According to informed sources, new, lower tariff-free quotas could be announced as early as April, with implementation scheduled for 1 July. This development coincides with the impending expiration in June of the current safeguards—quotas that regulate steel imports into the UK. These measures were initially adopted from the EU post-Brexit and extended until June 2026, but World Trade Organization regulations prevent their further extension.
The government is reportedly supportive of establishing fresh quotas with stricter import limits. It retains control over critical assets such as the British Steel and Speciality Steel works, which would be highly vulnerable if the safeguards are not replaced. The steel industry has vigorously argued that failure to implement new quotas would expose the UK market to a deluge of cheap, subsidised products.
Global Context and Protectionist Wave
The move comes against a backdrop of a massive global steel glut, predominantly fuelled by oversupply from China, the world's largest producer. Chinese steel exports reached a record high in December, with other nations like Vietnam, South Korea, and Turkey also aggressively seeking international buyers. This surplus has triggered a wave of protectionism, notably initiated by former US President Donald Trump, who imposed 25% tariffs in 2018 and later doubled them to 50%.
These actions effectively restricted access to the US market, prompting producers to seek alternative outlets and leading other economies, including the EU and Canada, to erect their own trade barriers. In October, the EU announced it would replace its safeguards with 50% tariffs and reduced duty-free quotas, forcing the UK to negotiate for a protected allocation to avoid being shut out, which could jeopardise the British industry's future.
Industry Perspectives and Divergent Views
Vlad Darahan, head of international trade and compliance at Tata Steel UK, criticised the current system, stating, "Current UK quotas are too generous to overseas suppliers and in certain cases higher than the total UK demand of that product. This results in the UK being an unfairly priced dumping ground for cheap imports." He urged the government to implement a stricter system based on actual national needs while collaborating with the EU on fair limits.
Conversely, some steel-using companies oppose lower quotas, warning that such measures could inflate raw material prices and highlighting that UK producers cannot meet demand in all areas. The industry has engaged in detailed discussions with the Department for Business and Trade and steel buyers to determine appropriate quotas for specific metal categories.
Calls for Robust Trade Defence
Gareth Stace, director general of UK Steel, emphasised the urgency, saying, "This is a fundamental issue. Much of the UK steel industry will no longer be viable unless the government puts in place robust trade measures." He pointed to China's subsidised production model as a key driver, arguing that without trade defences, the UK risks deindustrialisation.
A government spokesperson responded, "This is speculation about a complex issue where no final decisions have been taken, but we are working at pace to ensure the best outcomes to protect UK industry." The government reaffirmed its commitment to a sustainable future for UK steelmaking, promising to outline its long-term vision in a forthcoming steel strategy this year.
