European Union's Proposal to Match US Steel Tariffs Poses 'Survival Risk' to UK's Steel Industry

EU officials revealed plans to match the United States' steel tariffs, effectively doubling taxes on imports to 50% in a action condemned as "an existential threat" to the sector in Britain.

Major Challenge for British Steel Industry

With 80% of British exports going to the European Union, this policy shift creates the British steel sector's largest crisis, according to the industry association speaking for the sector.

New EU Proposals and Rules

In its plan submitted to the EU legislature on Tuesday, the EU executive also proposed reducing the existing quota for tariff-exempt steel and obliging international producers to state where the steel was melted and poured to prevent Chinese producers diverting exports through other countries.

EU steel sector stood at the brink of failure – we are protecting it so that it can invest, reduce emissions, and become competitive again.

Replacement of Existing System

The proposals are designed to replace a import framework that has been in operation for the last seven years and which is due to expire in 2026 and is now considered outdated. To do nothing could have been "catastrophic" for the industry, one EU official said.

Sector Reaction and Warnings

However, industry representatives, head of the industry body British Steel, said Brussels doubling its tariffs would pose "the biggest crisis the UK steel industry has encountered".

There were calls for the government to "acknowledge the critical necessity to put in place domestic protections to defend" the British steel sector – which is affected by a twenty-five percent duty from the US earlier this year – from the risk of millions of tonnes of global steel diverted away from US and European markets.

This flood of imports "might prove terminal for many of our remaining steel companies.

Labor and Political Pressure

Alasdair McDiarmid, representative at labor union the industry union, said the new measures represented "an existential threat" to British steel production.

Unions and industry leaders called on the UK government to start negotiations immediately with the EU on nation-specific duty-free quotas, noting that the UK was now the European Union's primary export market.

Industry Background

Sector representatives in the EU have also been warning for months that the European steel sector confronts being "eliminated" through the increased duties on American market shipments along with rising energy prices and low-cost Chinese imports.

The steel industry on both sides of the Channel is described as a essential sector, providing basic materials in everything from building frameworks, renewable energy equipment and railways to dishwashers and kitchenware.

Implementation and Future Actions

These proposals must be agreed by EU nations and the European parliament, with the EU executive head calling on national governments and MEPs to act fast in backing the proposal.

If the plan is ratified, the EU will reduce its existing tariff-free allowance by 47% to 18.3m tonnes a annually, a level previously recorded in 2013. It will impose a fifty percent tariff on imports exceeding the limit and oblige countries shipping to the EU to state the production origin to prevent circumvention of the measures.

Exceptions and International Cooperation

These European nations will be exempt from import limits or tariffs because of their close trading relationship in the European Economic Area, the European Union has said.

In addition to these measures, the European Union is seeking a "metals alliance" with the US to protect their respective economies from excess production.

The European Union needs to act now, and decisively, prior to all lights go out in significant portions of the EU steel industry and its value chains.