The Trump administration has announced that a 25% tariff on steel and a 10% tariff on aluminium imports from the EU are to come into force which could affect up to 32,000 people in the UK working in the steel industry.
In response to the 25% tariffs on steel imports the European Union issued a 10-page list of tariffs on US goods ranging from Harley-Davidson motorcycles to food products.
UK International Trade secretary Liam Fox said reportedly that the 25% levy on steel was absurd: “It would be a great pity if we ended up in a tit-for-tat trade dispute with our closest allies.”
The tariffs apply to a wide range of steel and aluminium products such as sheets, plates, bars, pipes and “semi-finished” products.
Economists reckon, that new tariffs will make steel and aluminium from the UK more expensive in the US, which could lead to a decline in demand for it – potentially affecting thousands of jobs.
Up to 32,000 UK workers could be affected
Reportedly, the reprieve for EU steel imports will affect around 32,000 people which are estimated to work in the steel industry; that is around 0.1% of the UK’s entire 32 million strong workforce.
Around half of those jobs are located in Wales, Yorkshire and the Humber, making those regions particularly vulnerable.
Tata Steel, which employs 8,500 people across the UK, has called for “swift and robust action” in response to the steel tariffs. More than 7,000 Tata workers are employed in Wales, including about 4,000 in Port Talbot – the largest steelworks in the UK.
Already in March, the GMB union warned that UK steel jobs could be under threat from the Trump tariffs and demanded a strong EU response to President Trump’s announcement of tariffs on imported steel.
In the end, the consumer pays the bill
Steel production accounts for £1.6bn of the UK’s gross value added, which is less than 0.1% of the UK’s total economic output.
The overall economic impact of a major hit to the steel industry might not be disastrous; but a bigger economic danger lies in the distinct possibility that other products and sectors could be targeted by the US government.
A general escalation of the ‘trade war’ imposed by the Trump administration could easily hit investment in the UK and that would likely harm the productivity growth, and economists point out that tariffs tend to be paid by consumers.
UK Steel director Gareth Stace said: “President Trump had already loaded the gun and today (31 May), we now know that the US Administration has unfortunately fired it and potentially started a damaging trade war.
“Since President Trump stated his plans to impose blanket tariffs on steel imports almost three months ago, the UK steel sector had hoped for the best, but still feared the worst.
“With the expiration of the EU exemption now confirmed to take effect tomorrow (1 June), unfortunately our pessimism was justified, and we will now see damage not only to the UK steel sector, but also the US economy.
“Throughout, we have urged the UK and EU authorities to do all they practically can to steer us away from this outcome, showing President Trump that we are not the problem here.
“But it is evident that even with the extra time provided by the temporary exemptions, common ground has not yet been found and plain common sense has not prevailed.
“Any US calls for the EU to voluntarily place hard limits on its exports of steel were completely unjustified, against WTO rules and run counter to central tenets of free-trade. It is only right that have been rebuffed by European Commissioner, Cecilia Malmström.
“It is difficult to see what good can come of these tariffs, US steel consumers are already reporting price increases and supply chain disruption and with some half billion dollars of steel exported from the UK to US last year, UK steel producers are going to be hit hard.
“As stated time and time again, the only sustainable solution to the root cause of the issue, global overcapacity in steel production, is multilateral discussions and action through established international channels.
“Even with the imposition of tariffs, it is vital that the EU and US continue discussions to find a way through the current impasse and reach an agreement that works for all parties.
“At the same time, it is only correct that the EU forges ahead with safeguard action, to shield against diverted trade swamping the European market, as well as its challenge to the US tariffs through the WTO. This is a bad day for the steel sector, for international relations and for free trade.”
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