Tata Steel Risks Exclusion From UK US Tariff Free Agreement

UK Ministers are working to ensure that Tata Steel, the country’s largest steel producer, benefits from tariff-free access to the United States under a new trade deal negotiated by Prime Minister Keir Starmer and US President Donald Trump. This deal, still awaiting final approval, aims to suspend the current 25 per cent tariffs on British steel and aluminium exports to the US. However, significant concerns remain over the exclusion of Tata Steel due to complexities regarding the origin of some of its products.

Tata Steel’s operations in Port Talbot, South Wales, faced challenges due to its transition to greener electric arc furnaces last year. With the shutdown of its blast furnace, the company has been importing steel from sister sites in India and Europe, raising potential issues under US import regulations. These rules mandate that all steel products must be “melted and poured” in the country of export. The lack of compliance with these requirements may jeopardise Tata Steel’s eligibility for the reduced tariffs.

Government negotiators are pushing to secure a carve-out that includes Tata Steel in the trade agreement, recognising the company’s significant contribution to the UK’s economy and export market. According to company estimates, Tata Steel exports more than $100 million worth of products to the US annually and has already faced losses of £150 million linked to existing tariffs. Directors from the company have highlighted the urgency of implementing the deal promptly to restore market stability and avoid further business disruption.

The situation is further complicated by concerns in the US about British Steel, which is owned by the Chinese Jingye Group. There are fears that connections to Chinese ownership could facilitate indirect access for Chinese steel into the US, bypassing trade restrictions. With the US recently doubling tariffs on foreign steel imports to 50 per cent, securing a favourable position for UK exporters remains a critical priority.

The delay in finalising the UK US agreement has caused widespread frustration within the steel industry. Sector leaders emphasise the immediate need for clarity and agreement on tariff structures to enable long-term sustainability and competitiveness for UK steel manufacturers in the global market.

The successful conclusion of the deal would not only enhance export opportunities but also affirm Britain’s position as a strong trading partner to the United States. However, the complexities of this negotiation underscore the challenges faced by policymakers to balance domestic economic interests with international trade regulations.