US protectionism receives steely UK reception

Britain’s steelmakers are warning against the potential damage to legitimate UK exports to the United States from being caught up in US protectionist measures to counter the dumping of cheap Chinese steel.

Global Steel Industry - Protectionism - UK Manufacturing Steel Foundry Factory Metal Stock Rolling Rail - image courtesy of Pixabay.
Total UK steel exports to the US in the past 12 months were 250,000 tonnes, worth upwards of £350m – image courtesy of Pixabay.

The warning follows President Donald Trump’s initiation of a ‘Section 232’ investigation into the effects of steel imports on US national security.

Although Trump’s plans are designed to hinder the US’s trade with China, there is concern among UK companies that it may inadvertently bar UK trade with the country as well.

Though the full details of the investigation are still unclear, it has been described as a “worrying development” by Gareth Stace, director of trade body and division of EEF, UK Steel.

Stace continued: “The UK sector is entirely supportive of measures taken to tackle dumping of steel products and unscrupulous trading practices, but this move has the potential to go much further than necessary.

“The principle of free trade is of huge importance to the global steel sector, and any action that moves us away from it is a significant concern. Trade defence instruments must be seen as a last resort to protect domestic industries and ultimately boost global free trade. This move at least has the potential to cross the line into protectionism which in the long term can only be harmful to the global sector.”

According to UK Steel, total exports to the US in the past 12 months were 250,000 tonnes, worth upwards of £350m – accounting for almost 8% of total exports from the UK. Some 70% of UK steel exports currently go to the Europe.

In the face of continuing uncertainty surrounding export trade in a post-Brexit landscape, securing and maintaining a foothold in key markets such as the US has never been more significant.

Following the referendum on Britain’s place within the European Union in June 2016, the subsequent depreciation of sterling saw British steel on the global market at 15% less than that of China. However, with sterling stabilising, that potential competitive advantage has been eroded and British steelmakers are left facing significant and long-standing challenges.

The sector has been in a state of contraction for almost 50 years, from 320,000 employees in 1971 to around 30,000 today. In response to the issue, UK Steel has already raised questions with the UK government and is seeking further clarification and support.

The organisation has asked for an Industrial Strategy, supported by strategic investments, which can help sustain the steel industry, as well as the livelihoods of those who have spent many years working in the industry. It is also working with its members to gain a greater understanding of the challenges and opportunities facing the sector.