EU Plans Tariff Increase and Quota Reduction Pose Grave Threat to UK Steel Sector

The UK steel industry faces a grave threat as the European Union considers drastic changes to its import regime, which could deal a devastating blow to British manufacturers. Officials in Brussels are preparing to halve tariff-free quotas and double tariffs on steel imported from the UK to 50 per cent, under mounting pressure from steel producers in France, Spain, Italy and several other member states.

The European market is crucial for British steelmakers, with 1.875 million tonnes of steel sold to the Continent over the past year, accounting for nearly 80 per cent of the UK’s finished steel exports. Under the post-Brexit trade agreement that will expire in June next year, UK steel producers currently benefit from tariff-free quotas, with a 25 per cent tax imposed on shipments exceeding those limits. The looming changes, which could be enforced as soon as January, have triggered alarm across the industry.

Axel Eggert, director general of the European Steel Association, has stated his strong support for the move, citing longstanding criticisms that lax border controls have hampered profitability for EU steelmakers. UK officials are working urgently to persuade their counterparts in Brussels to rethink these measures, which risk crippling an industry already suffering from multiple headwinds.

The timing could scarcely be worse for the UK steel sector, which has recently endured punitive tariffs from the United States and is bracing for the introduction of the EU’s Carbon Border Adjustment Mechanism next year. This regulation will impose additional duties on steel produced with carbon-intensive processes, with the UK’s own version not scheduled for introduction until 2027. There is mounting concern that the gap could leave Britain wide open to a flood of cheap imports from Asia.

Industry figures and trade policy experts have warned that the EU’s protectionist measures would exacerbate existing market distortions, potentially forcing UK plants out of business unless decisive government backing is provided. Peter Brennan from UK Steel stressed that the EU remains by far the biggest market for British steel and that any sharp reductions in access would be seriously damaging.

The government has made a commitment of up to £2.5 billion to support and restructure the steel sector, including nationalising critical assets and reviewing options for new trade defence measures. Trade negotiations continue in the hope of securing a more favourable outcome, but the spectre of harsh EU tariffs on UK steel now looms large over the coming months.