Steel Industry Faces a Potential Slump in Trade as US Reduces Tariffs on EU

Trade relations between Europe and the US, which deteriorated during the previous American presidential term, are regaining color. But the UK, which left the European Union (EU) after Brexit, is becoming a collateral victim at times because of this improvement in EU-US relations.

The Current Situation

The UK steel industry is preparing for an immediate drop in trade from the start of 2022, while EU countries will enjoy a 25% price advantage by selling into the American market.

In fact, the EU and the US have reached a deal to remove tariffs on a quota of steel and aluminum imports from the bloc into the US beginning January 1st. However, tariffs will remain on all British exports of steel and aluminum, as a result of government talks failing to achieve a corresponding breakthrough. According to the joint US-EU statement on steel and aluminum trade, “in a demonstration of renewed trust, and reflecting long-standing security and supply chain ties, the US will not apply section 232 duties and will allow duty-free importation steel and aluminum from the EU at a historical-based volume and the EU will suspend related tariffs on US products.”

Gareth Stace, Managing Director of UK Steel, has also stated, “UK steel exports to the US have halved since President Trump introduced steel tariffs in 2018.” Stace does not doubt these measures have significantly harmed the UK’s interests in its second-largest steel export market. “While we welcome the US decision to start easing tariffs, without a very early UK deal, our export position will only deteriorate further. It is essential that the government do everything it can to strike a deal and ensure that UK steelmakers are able to sell their steel to the US.”

The relaxation of quotas will result in a large increase in metallurgical product exports to the US, which is a breath of fresh air for EU countries. However, the current raw material shortage in Europe may cause European countries to decrease their exports and favor the supply of local industries until the supply chain situation improves.

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