Key points
- UK abandons its aim of zero tariffs on steel exports to the US.
- Tariffs on British steel will remain at 25%, a level still considered damaging by UK businesses.
- The disagreement centers on US requirements for steel production, which UK producers can no longer fully meet.
- Despite the setback, the UK and US are expected to announce collaborations on digital assets and other economic initiatives.
The United Kingdom has unexpectedly shelved negotiations with the United States aimed at eliminating tariffs on British steel imports. This decision, made ahead of President Trump’s state visit, represents a significant blow to the UK steel industry, which had hoped for the removal of the 25% levy.
Instead, British officials now anticipate the tariffs will remain at 25%, a level deemed damaging by domestic steel producers, although less than the 50% tariff imposed on steel from other countries. This outcome casts a shadow over Prime Minister Keir Starmer’s efforts to leverage the state visit for diplomatic gains.
The impasse stems from a US insistence that steel must be “melted and poured” within the UK to qualify for tariff exemptions. This requirement poses a considerable challenge for UK steel producers, particularly Tata Steel UK, which closed its last blast furnace last year.
While President Trump expressed openness to refining the existing trade deal, finalized in May, the compromise reached falls short of the initial agreement, which promised tariff elimination. This failure to secure zero tariffs is likely to intensify criticism of the Starmer administration’s strategy towards the Trump administration.
Despite the setback regarding steel tariffs, the state visit is proceeding with plans for significant economic announcements. Both American and British companies have announced substantial investments, including tens of billions of dollars from Microsoft, OpenAI, and other US technology firms in UK infrastructure.
President Trump is also expected to announce over $10 billion in new economic deals, coupled with initiatives to align the nations’ financial sectors. This includes a planned announcement regarding closer cooperation between the UK and the US on digital assets, such as cryptocurrencies.
The UK government maintains it will continue discussions with the US to reduce steel tariffs over time. However, the current 25% tariff commitment is a considerable disappointment to UK businesses who anticipated a complete removal of tariffs during the state visit.
While some hope remains for tariff reductions, the limitations imposed on the quantity of British steel eligible for lower tariffs could complicate any future agreement. This situation highlights the complexities of navigating trade relations, even within a close alliance, and raises questions about the overall success of the high-profile state visit.
