The government has rushed forward plans for a £2.5bn investment in the UK steel industry after Donald Trump announced 25% tariffs on all imports of steel and aluminium into the US.
The business secretary, Jonathan Reynolds, will publish a green paper entitled Plan for Steel on Sunday – several weeks before schedule – in a sign of how Trump’s tariffs are sending shock waves through a UK government desperate to kickstart economic growth.
Speaking to the Observer, Reynolds said that, even before Trump’s return to the White House, the government was determined to bolster and expand the UK steel industry, but the US president’s actions had made the need to act more urgent. “The context, both at home and abroad, is behind the sense of urgency that we are demonstrating by bringing forward publication of the strategy.”
Referring to the Trump tariffs, he added: “This is clearly a further challenge but it makes bringing forward the strategy even more important.”
The UK has so far refused to join the EU and Canada in threatening immediate retaliation if the US pushes ahead and imposes the 25% import taxes next month. Britain exports about 209,000 tonnes of steel to the US every year and imports about 16,000, making it the second-biggest export market after the EU.
“It is in neither of our interests to have these tariffs,” said Reynolds, who said he remains optimistic that talks with US officials could lead to a resolution before serious damage is done.
The director general of industry body UK Steel, Gareth Stace, said last week that the US action would stifle UK exports and damage Britain’s balance of trade at a time when global protectionism was on the rise.
“The US is our second-largest export market after the EU, and this move threatens more than £400m of steel exports [each year],” Stace said.
In its election manifesto, the then Labour opposition announced plans to spend £2.5bn in order to “rebuild the UK steel industry”. The money would sit alongside a separate £500m package for Tata Steel to part-fund new steel production at Port Talbot in south Wales.
Now ministers intend to turbocharge decisions on how that money can best be used to strengthen the steel industry, with the emphasis being on government co-financing of innovative projects led by the private sector. Part of the aim is to ensure that a severely weakened UK steel industry is healthy enough to act as primary supplier in key infrastructure projects in this country that lie at the heart of the government’s drive for growth.
Last week, Heathrow delivered welcome news to British Steel, and the industry nationwide, by pledging to use UK-made steel in its largest-ever investment programme, and indicated it would also do so if and when the controversial proposal for a third runway gets the official go-ahead.
Heathrow’s plans that would use UK steel include the main new terminal’s infrastructure, with investment in the capacity of Terminal 2 and Terminal 5.
At prime minister’s question’s on Wednesday, the Liberal Democrat leader, Ed Davey, told Keir Starmer that the UK needed to hit back at Trump more aggressively. “Sitting back and hoping Trump won’t hurt us just isn’t going to work,” Davey said, adding that the UK needed to negotiate “from a position of strength”.
Starmer responded, saying the UK response would involve a “level-headed assessment of the implications”. He added: “But we will always put our national interest first and steelworkers first.”
The green paper will look at the long-term issues facing the industry, such as high energy costs, international turmoil – including the effects of tariffs – and scrap metal recycling, with the aim of protecting jobs and living standards in the UK’s steel-producing heartlands.
Some of the £2.5bn investment is expected to be spent on electric arc furnaces, which can heat steel up to high temperatures without burning fossil fuels.
Reynolds said: “The UK steel industry has a long-term future under this government. We said that during the election, and we are delivering on it now.”
