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The UK government has reduced steel import quotas and raised tariffs to 50 per cent outside unit limits as part of a strategy to save the industry, an “bold” move that is likely to draw criticism from economists and opposition groups.
Quotas for imports free from the higher tariffs will be reduced by 60 per cent from July. The government has set a target for domestic production to support half of steel demand in the UK.
“Making steel in the UK is vital for national security, critical infrastructure and the wider economy,” business secretary Peter Kyle said.
“With this strategy we are closing the decades-long chapter of destructive de-industrialisation and committing instead to strengthening and sustaining Britain as a steel-making nation.”
The move to introduce tariffs has already led to backlash from the Conservatives, with shadow business secretary Andrew Griffith hitting out at the government’s decision to introduce a new tax on businesses.
“Raising the cost of imported steel means more cost for the construction industry, less infrastructure investment, and is a further blow to the diminishing number of firms making things in the UK,” Griffith said.
“Astonishingly, almost a year on, the government seems no closer to making the Chinese owner of British Steel Scunthorpe step up to their liabilities.”
“Labour don’t understand business and these tariffs now join the list of taxes and employment red tape which are choking growth and making us all poorer.”
Steel industry’s mixed response
UK Steel, the main industry body for the sector, said the government’s reforms were “incredibly bold” but warned that a net zero pricing scheme for trade and higher energy prices could undermine businesses’ competitiveness.
Gareth Stace, the director general of UK Steel, said: “The government’s bravery in taking the required measures represents a real shift in the culture of Westminster from protecting the ideology of free trade at any cost, to defending critical industries and national security.
But an energy policy chief at the body said the government strategy’s approach to the Carbon Border Adjustment Mechanism (CBAM), which attempts to equalise net zero costs between domestic products and imports, risked “achieving precisely the opposite” of the scheme’s aim.
“As it stands, the UK CBAM could favour imported Chinese steel over steel made in the UK,” Frank Aaskov, the energy policy director at UK Steel, said.
The government is also set to finance steel production through the national Wealth Fund, with £2.5bn set to be injected into manufacturers by 2030.
Some of the cash would go towards investments in building electric arc furnaces, which the government said would “support net zero”.
It will also go towards supporting operations at Scunthorpe after the government took control of manufacturing under Chinese company Jingye Group’s ownership, with British Steel on the brink of collapse until Labour stepped in to keep blast furnaces on in April 2025.
A National Audit Office report said this week that operations were costing the Department of Business and Trade about £1.3m a day, with the government already spending £377m in nine month
