Trump’s steel and aluminium tariffs: should we be worried?

Keir Starmer told PMQs that the government is conducting a ‘level-headed assessment’ of Trump’s proposed 25% tariffs on steel and aluminium exports to the US.

In response to a question from Lib Dem leader Ed Davey, who suggested the government might consider retaliatory tariffs on American electric cars, Starmer said: ‘British Steel is an essential part of our heartlands and we will not abandon our skilled workforce…We will always put our national interest first, and our steel workers first.’

With the tariffs set to be imposed from next month, unless the government can secure an exemption in the meantime, BCIS Chief Economist Dr David Crosthwaite said, ‘the only thing we can really be certain of at the moment, is that there is an added layer of uncertainty in the economy to navigate.’

How much are steel exports to the US worth?

For construction products, HMRC Overseas Trade Statistics show that the US has been our second largest export market since 2021, with trade worth over £1 billion in 2023.

According to the United Nations COMTRADE database on international trade, the UK exported $635 million worth of iron or steel articles (finished goods that have been manufactured, including but not limited to construction materials, for example beams, girders, and rebar) to the US in 2023. Iron and steel exports (raw or semi-finished materials) were worth $408 million and aluminium $232 million.

UK Steel – the trade association for the industry – has said UK steel exports to the US were worth approximately £400 million in 2023.

What might the impact of tariffs be if they prove to be unavoidable?

Tariffs on UK steel are nothing new. In March 2018, during Trump’s first term, he imposed tariffs of 25% on steel and 10% on aluminium imports. Trump cited national security concerns, arguing that the decline of US steel and aluminium industries posed a risk to American defence and infrastructure.

Despite the lobbying efforts of the government at the time, the UK was not granted an exemption until March 2022, when a tariff-rate quota system was secured, allowing 500,000 metric tonnes of UK steel to enter the US annually without tariffs.

In the intervening years, the tariffs had led to a marked decrease in UK steel exports to the US and significant financial losses for the industry.

With the UK being targeted again by Trump, who has said there will be ‘no exemptions, no exceptions’, UK Steel’s Director General declared that Trump had ‘taken a sledgehammer to free trade, with huge ramifications for the steel sector in the UK and across the world.’

Dr Crosthwaite said: ‘Tariffs are and always have been a part of global business but there’s an added dimension of unease to the often-chaotic way in which announcements are made when Trump is in the White House. This can be especially harmful to construction and other industries because uncertainty dents investor confidence.

‘It’s important not to get ahead of ourselves, though. It’s still too soon to draw definitive conclusions with talks between the UK and US governments yet to take place and there are grounds to be optimistic that we may yet avoid the direct crosshairs of Trump’s tariffs, not least because the UK is no longer part of the EU. Having said that, even if the UK does avoid direct tariffs, escalating global trade tensions will be difficult to ignore, particularly for industries like construction that are so reliant on international supply chains and steel pricing stability.

‘If imposed, tariffs could disrupt supply chains, making steel prices much more volatile. While a short-term domestic surplus might lower UK prices further, long-term effects on construction projects will depend on how well the industry adapts.’

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