UK halves steel import quotas to shield domestic industry from Chinese oversupply
New tariffs of 50% will apply to imports exceeding the revised 3.2 million tonne limit, effective 1 July, in a move designed to counteract the impact of subsidised Chinese production.
The UK government has confirmed it will reduce the tariff-free steel import quota by 51%, bringing the annual allowance down to 3.2 million tonnes from 1 July. The decision, announced by Business Secretary Peter Kyle, aims to protect the domestic steel sector from a global oversupply of cheap Chinese metal. Tariffs on imports exceeding this new limit will double to 50% of the product’s value, a measure that mirrors similar safeguards recently introduced by the European Union.
The revised quotas replace pre-Brexit rules that had set import levels across the EU, which the UK retained after leaving the bloc. While the government initially proposed a 60% reduction in March, the finalised 51% cut represents a compromise reached after negotiations. Kyle stated that the measure was designed to provide certainty for businesses across the supply chain while shielding UK steelmaking from global overcapacity. The government has committed to engaging with industry and reviewing the policy after 12 months.
The safeguards cover 28 types of steel, ranging from construction bars to rolled sheets used in manufacturing sinks and aeroplanes. To support manufacturers without local alternatives, 11 specific steel types have been exempted from tariffs. This exemption addresses concerns raised by industry bodies that blanket duties could cripple sectors reliant on imports that are not produced domestically. The UK currently produces approximately 3 million tonnes of steel annually, a fraction of the global supply of nearly 2 billion tonnes.
UK Steel, the industry trade body, has described the situation as an existential threat to the British steel sector, arguing that such dramatic measures are necessary for survival. However, the policy has faced opposition from steel users within the UK, who warned that the quotas could drive up prices for products not available from the country’s few remaining furnaces. The government acknowledges these concerns but maintains that the safeguards are essential to prevent further erosion of domestic capacity.
Negotiations regarding the trade impacts have taken place in Geneva at the World Trade Organization headquarters over the past three months. Both the UK and EU governments cite subsidised industries in China and other countries as the primary cause of global overcapacity. When domestic demand drops in China, excess steel is exported, undermining local industries in other nations. The UK’s biggest export market for steel remains the EU, making alignment on trade policy a critical priority for both governments.