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The UK construction and housebuilding industry has warned it will feel “shockwaves” from a decision to double tariffs on steel imports from July 1, despite government efforts to soften the blow caused by the new policy.
Ministers confirmed on Thursday the final shape of plans to halve tariff-free quotas and double duties on steel UK imports to 50 per cent, in a move to protect UK steelmakers from being swamped by cheap Chinese imports.
Trade minister Sir Chris Bryant said that UK steel production had more than halved in the past decade, putting at risk an industry that was critical to national infrastructure and defence. “We must act now to secure its future,” he said.
The UK is following in the footsteps of the US, EU and Canada, which have all imposed significant duties to defend against a global glut of steel, the vast majority of which comes from China. Global excess capacity is set to exceed 720mn tonnes by 2027, according to the OECD.
However, following an outcry from steel-using industries in March, Bryant announced that the government was diluting its original proposal and would instead reduce quotas for tariff-free steel imports by 51 per cent and not 60 per cent as originally stated.
Industry lobbies representing UK steel users welcomed the reduction but warned that the tariffs would impose punitive costs on industries reliant on steel imports.
Developers have warned that increases in the price of structural steel — from about £700 per tonne at the start of this year to around £1,000 per tonne today — have added about £4,000 to the average cost of building a house.
John Wilkinson, chief operating officer at BAM UK & Ireland, the British division of one of Europe’s largest construction, civil engineering and property development companies, said the measures would still be punitive despite the reduction in quota cuts.
“The reduced availability of steel will obviously send shockwaves through the construction industry, and could have a knock-on impact for smaller contractors and construction firms,” he said.
Jonathan Clemens, chief executive of the British Constructional Steelwork Association, said a loophole whereby items fabricated from steel could avoid paying duties was of particular concern.
“The continued failure to include fabricated steel [in the tariff regime] leaves the constructional steelwork sector dangling over a precipice,” he added, urging the government to rethink the scope of its scheme.
UK Steel, the lobby group that represents steel producers, welcomed the new package but said that revised quotas would create winners and losers, citing galvanised steel and wire producers as two areas of concern.
“There has been an opportunity missed in key areas, which will leave key parts of the UK supply chain exposed to heavily subsidised imports that are currently ravaging steel industries in developed countries,” said Peter Brennan, UK Steel’s director of trade.
The British Chambers of Commerce, which had previously raised significant concern over the plans, said the government had been left scant room for manoeuvre by the actions of other governments. The EU, for example, will announce its own quotas on July 1.
“The government is walking a precarious tightrope in trying to balance the needs of steel producers and users and its hand has been forced by the actions of other global players,” said BCC head of trade policy William Bain. “There will still be many losers.”
The government has promised to review the impact of the measures after 12 months, although three industry insiders said they had lobbied for a shorter review period.
Stephen Morley, president of the Confederation of British Metalforming, which represents mainly small businesses that use steel products, welcomed the improved package but called for close monitoring.
“Our focus is on ensuring the policy works in practice, ensuring UK steel producers deliver the promised capacity, and working with the government on a backstop mechanism should UK steel production fall short,” he added.
