UK performs down risk of Donald Trump’s metal and aluminium tariffs | USAEMALL.com

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Downing Street has played down the impact on the British economy of US tariffs on steel and aluminium, even as the UK’s steel industry warned that President Donald Trump’s proposals would be “devastating”.

A spokesman for Prime Minister Sir Keir Starmer refused to say on Monday whether Britain would retaliate against Trump’s move to impose 25 per cent tariffs on all steel and aluminium sold into the US.

“We have not seen the precise details yet, I would not want to get ahead of that,” the spokesman said, adding that the US accounted for only 5 per cent of UK steel exports in 2023 and 6 per cent of aluminium exports.

“It’s important to see this in the context of our exports,” he said.

However, Downing Street’s attempt to play down the significance of Trump’s tariff threat was not shared by Britain’s steel industry, which warned that the imposition of US tariffs would be a “devastating blow”.

Although UK steel exports have fallen in recent years amid a wider industry decline, the US is Britain’s second-largest export market after the EU.

The US accounted for about 165,000 tonnes of Britain’s steel exports in 2023 — about 5 per cent of total exports but 8 per cent by value and worth close to £400mn.

“At a time of shrinking demand and high costs, rising protectionism globally, particularly in the US, will stifle our exports and damage over £400mn worth of the steel sector’s contribution to the UK’s balance of trade,” said Gareth Stace, director-general of trade body UK Steel.

In his first term as US president, Trump imposed a 25 per cent tariff on steel imports and 10 per cent on aluminium, before subsequently granting exemptions to several trading partners, including Canada and Mexico.

The UK exported about 300,000 tonnes of steel to the US in 2017 before Trump imposed tariffs in 2018.

The EU retaliated to the 2018 tariffs by imposing levies on a series of US imports, including bourbon whiskey, Harley-Davidson motorcycles and motor boats. Britain, which was still a part of the EU single market until 2020, also imposed those tariffs.

Under a truce brokered by Joe Biden’s administration, the US and the UK agreed a system of tariff rate quotas in 2022.

Starmer and his ministers have so far tried to avoid the trade wrath of Trump by keeping their heads down, steadfastly refusing to publicly criticise the US president.

However ministers have kept in reserve the possibility of retaliation in the event of tariffs being imposed on the UK, with trade experts saying they could dust down the old list of EU trade sanctions.

The Scotch whisky industry would, however, oppose tariffs being imposed on bourbon, fearing that its own product could be targeted by Trump in a tit-for-tat dispute. 

Industry experts said it was not yet clear whether Trump’s recent announcements would override the existing arrangements but warned that they added to general uncertainty at a time when global markets were flooded with cheap Chinese exports.

Global excess capacity was estimated at 543mn tonnes in 2023 and is forecast to reach 630mn tonnes by 2026, said UK Steel. 

Executives said privately they were worried in particular about foreign steel being diverted to the UK as a result of the new trade barriers.

Alasdair McDiarmid, assistant general secretary at the steel union Community, said a “punitive new tariff on UK steel exports would be hugely damaging and threaten jobs”. 

“For the US, it would also be self-defeating, as the UK is a leading supplier of specialist steel products required by their defence and aerospace sectors,” he added.

Nadine Bloxsome, chief executive of the Aluminium Federation, said news of the tariffs were “deeply concerning” for aluminium producers. 

“At present, the UK exports significant volumes of aluminium to the US, and these proposed tariffs would not only increase costs for UK suppliers but also disrupt long-standing trade relationships,” said Bloxsome.