In a decisive next move, the USA has imposed a 25% import tax on all steel and aluminium entering the United States. This action is part of a broader strategy to shield American industries from foreign competition.
The current American administration leader has stated that he applied the 25% rate to both metals “so that everyone can understand exactly what it means.” and has now announced that “It’s 25% without exceptions or exemptions. That’s all countries, no matter where it comes from, all countries,”.
By making imported steel and aluminium more expensive, the aim is to invigorate domestic production and safeguard American jobs. However, this decision has profound implications for international trade relations and could trigger retaliatory measures from affected countries.
While Canada is identified by the BBC as being at the highest risk from these changes - in the US President's words as he signed the proclamation "This is a big deal". These new measures are expected to come into force on 12 March 2025. So, what could changes mean for the UK or Ireland?
Historical Significance of the Steel Industry in the UK and Ireland
Firstly, to understand the impact, it's essential to grasp the historical landscape of steel and aluminium in the UK and Ireland.
The UK's steel industry has been a cornerstone of its industrial and economic development. From the pioneering days of the Bessemer process in the mid-19th century to the establishment of major steel production centers in Sheffield and Middlesbrough, the UK has played a pivotal role in advancing steel manufacturing technologies. This legacy continues to shape the country's industrial landscape today. However, UK-based steel producers face high industrial energy prices, which are almost 50% higher than the EU average, along with high business rates.
Ireland's steel industry, though smaller in scale, has a storied past with Irish Steel Limited, later known as Irish Ispat, playing a significant role from its establishment in 1939 until its closure in 2001. Similar to the UK, global competition and economic conditions have influenced the decline in production. The industry was a key part of Ireland's industrial landscape, particularly in Cork Harbour, where the main plant was located. Despite the industry's decline, its legacy continues to influence Ireland's manufacturing sector.
While both countries still produce and export aluminium and steel on a smaller scale than their historic levels, the UK and Ireland now primarily import steel from Germany, Spain, and Belgium within the EU. Additionally, both countries have become significant importers of aluminium. In 2023, Ireland imported approximately $837.31 million worth of aluminium, and in 2022, the UK exported around $858 million worth of raw aluminium, ranking 26th globally. Aluminium is particularly vital for the UK and Ireland's growing automotive and aerospace industries, which prefer lightweight materials over heavier steel.
Implications of Steel Tariffs for UK and Irish Businesses
The introduction of steel tariffs could have significant implications for businesses in both the UK and Ireland. These tariffs are likely to increase the cost of raw materials, thereby affecting the global competitiveness of steel products. According to the Financial Times, "The US accounted for only 5 percent of UK steel exports in 2023 and 6 percent of aluminium exports." However, the primary concern for many is not the risk to exports but the broader economic changes that are causing widespread unease.
Dramatic changes like these can also disrupt supply chains, making it more challenging for businesses to source the materials they need. Additionally, other countries may impose retaliatory tariffs, further complicating trade dynamics and potentially impacting other sectors of the economy.
Current Export Rates and Challenges for the Steel Industry
As of the latest data, the UK exports approximately 3.4 million metric tons of finished and semi-finished steel annually. The primary markets for UK steel exports include the EU, the United States, and various countries in Asia. However, the UK's steel export rate has faced challenges due to factors such as Brexit, which introduced new tariffs and customs checks, and global market fluctuations.
Ireland exported approximately €342.3 million worth of iron and steel in 2024. The primary markets for Irish steel exports include the EU and the United States. However, the export rate has faced challenges due to global market fluctuations and economic conditions.
The implementation of steel tariffs has far-reaching implications across the world, it is essential for policymakers and businesses in both countries to closely monitor and adapt to these changes. To reduce any spike in reactionary knock on effect that could impact growing industries - tariff readiness is key.
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References:
- Historic England - The Steel Industry in England: An Historical Overview
- House of Commons Library - UK Steel: Decades of Decline
- Statista - Steel and Metal Export Trading in the UK
- End of Year Report on the Irish Steel Industry (2024) - Irish Steel
- National Library of Ireland - A History of Irish Steel
- IBISWorld - Iron & Steel Manufacturing in Ireland
