British steelmakers are warning of an ‘existential threat’ to the industry from looming EU trade tariffs next year.
Bosses want urgent action from the Government as fears grow of a double whammy of a hit to the UK’s biggest export market that would also threaten to divert cheap imports towards Britain.
‘Thousands’ of jobs are said to be at risk in the sector – which employs 33,700 people – unless ministers double down on negotiations with Brussels and bring in protection measures.
The EU plans to halve its annual tariff-free steel import quota to 18 million tons next year, while doubling duty on excess imports from 25 to 50 per cent.
This means exporting steel to the EU is likely to become more expensive for the UK, while cheap steel from other countries, notably China, will be driven to Britain which has lower trade barriers.
Last week it was reported that the Government was mulling ‘retaliatory’ action against Brussels after its own assessment found the EU measures would have a ‘significant impact’ on UK steel producers. Ministers stress they are still trying to strike a deal.
Concern: British steelmakers are warning of an ‘existential threat’ to the industry from looming EU trade tariffs next year
But Gareth Stace, head of trade body UK Steel, warned Britain’s ‘hugely oversized’ import quotas would be useless in stopping a flood of cheap imports as they are set at levels above market demand.
He said replacement quotas, to be introduced next year, would have to be set low for types of steel that the UK produces in ‘abundance’, adding: ‘We need the Government to come out strongly to protect the UK from this flood of what would be originating from China – state-sponsored steel.’
The plea comes as the Government seeks a buyer for British Steel, which runs the country’s last blast furnaces at Scunthorpe, and Speciality Steels UK (SSUK).
European firms are said to be considering bids for SSUK, which employs 1,500 staff, so they can access US markets with only 25 per cent tariffs against the 50 per cent Washington levies on the EU.
A source close to one big steelmaker warned the EU trade barriers posed an ‘existential threat’ to UK industry – but Stace added: ‘That is almost an understatement.
‘The EU accounts for 80 per cent of our exports. If we don’t get a deal, most of our sector would be devastated. There would be job losses in the thousands. We are a sitting duck.’
The issue is piling further pressure on the sector after the US this year U-turned on a deal not to levy tariffs on British steel imports.
Bosses are becoming increasingly frustrated at the delay in Labour’s steel strategy, setting out how £2.5 billion will be spent to support the industry up to 2029.
Industry Minister Chris McDonald said the Government remained committed to ‘a bright and sustainable future for steelmaking in the UK’ and was ‘determined to address the issues’ facing the sector, with its Steel Strategy to be published ‘later this year’.
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