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UK business secretary Jonathan Reynolds has vowed to “stand up” for the British steel industry and warned Washington that retaliatory measures “already exist”, as the reimposition of US sanctions loom.
Reynolds said he was due to speak to US commerce secretary Howard Lutnick on Thursday night in a bid to seek a carve-out from a 25 per cent levy set to be imposed globally on steel and aluminium imports to the US from Wednesday.
In an interview with the Financial Times, the business secretary said he wanted to keep the conversation with Lutnick “constructive” but signalled that tit-for-tat measures remained an option.
Asked about possible retaliatory measures, Reynolds noted the UK had measures on the shelf that the country had used in response to steel and aluminium tariffs President Donald Trump imposed in his first term in office.
They “already exist, because obviously there were the tariffs in place [previously under Trump] and the set of retaliatory measures in the UK . . . It’s not so much about drawing up contingencies, because we know what was there in the past,” he said on a trip to Tokyo.
The tariffs between the UK and the US were suspended under a deal agreed in March 2022 between the then-Conservative government in London and then-president Joe Biden.
Reynolds stressed no decisions had been made on retaliation. However, British officials said they were aware that Indian and other investors in UK steel were watching to see Britain’s response to Trump’s threatened tariffs. Failing to retaliate if the tariffs were imposed could chill inward investment, the officials said.
The UK steel industry is dominated by Indian-owned Tata Steel and Chinese-owned British Steel, which still employ the majority of workers. Smaller players include Liberty Steel and UK state-owned Sheffield Forgemasters.
“We’re proud of the inward investment that we have received over the years. The British steel industry has foreign ownership in it, but that has brought at times expertise, capital that we’d be seeking to defend,” Reynolds said, vowing to “stand up for the whole of the sector”.
Trump in 2018 imposed tariffs of 25 per cent on steel and 10 per cent on aluminium from most countries, citing national security grounds. The EU, which at the time included the UK, responded by imposing tariffs on a range of US imports, including steel but also iconic US products such as bourbon whiskey.
Since returning to office in January, Trump has again unsettled global markets with tariff threats as investors in exposed industries fret over whether he will follow through or grant exemptions.
Trump last month signalled the UK could yet escape any tariff action, telling reporters he was working on a trade deal with Britain after a White House meeting with Prime Minister Sir Keir Starmer.
Describing Starmer as a “very tough negotiator”, Trump said the two countries could “very well end up with a real trade deal where the tariffs wouldn’t be necessary”.
Reynolds said a UK exemption to the steel and aluminium tariffs was “very strongly in the US’s interests”, pointing to “the supply of steel to the US Navy for the submarine programme”.
“In the main this is specialised, high-value, pretty niche products rather than bulk. And the concerns the US has about overcapacity, we share, but we’re not the problem. Our steel industry is relatively small,” he said.
Britain’s steel output has been steadily declining. Production in 2023 fell to 5.6mn tonnes, its lowest level since the Depression in the 1930s.
UK steelmakers have long complained that they pay 50 per cent more for their electricity than peers in France and Germany, mainly because of higher UK wholesale gas prices and partly because of higher network charges.
Reynolds said he and Lutnick had “some excellent conversations” and that the UK government understood the US administration’s position on trade deficits in goods with Europe and China, and why the matter was important to Washington. UK and US trade is broadly balanced.
Chrysa Glystra, director of trade and economics policy at industry trade body UK Steel, said without an exemption for the industry, Britain’s exports would be “significantly damaged, adding to the mounting challenges for our sector”.
Even if tariffs are not applied directly to the UK, she added, the sector would “still face the consequences of trade diversion from other markets facing export barriers to the US”.
Reynolds is in Tokyo this week alongside UK foreign secretary David Lammy for a “2+2” economic dialogue with their Japanese counterparts.
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