Government confirms end of US tariffs on steel and aluminium but hopes of an FTA are dashed again

Wed 23 Mar 2022
Posted by: William Barns-Graham
Trade News

steel tariffs

The UK has achieved a deal with the US to end tariffs on steel and aluminium exports from 1 June this year, but hopes of a wider free trade agreement have been dashed by the US administration.

The UK will in turn suspend its rebalancing measures on US products such as jeans, motorbikes and whiskey.

The government said that the deal “clears the way for us to focus on the next steps for the UK-US trade relationship”.

‘Good news’

Trade minister, Anne-Marie Trevelyan secured the deal following two months of talks with US commerce secretary Gina Raimondo.

Trevelyan predicted the deal yesterday and even hinted that it could lead to “bigger and chunkier” free trade agreement negotiations.

Trevelyan today said that the deal on tariffs is “good news for our steel and aluminium industries who have been unfairly hit by these tariffs, and the 80,000 people employed across the sector.”

“It means our manufacturers can now enjoy a high level of tariff-free access to the US market once again,” she added.

FTA hopes dashed

Her US counterpart Katherine Tai dashed hopes of a broader agreement, however, saying it is not worth spending “years and a lot of blood, sweat and tears working on”.

“A free trade agreement is a very 20th century tool,” she said alongside Trevelyan at a press conference last night, reported in the Daily Mail.

She added: “I want to ensure the conversations and the approaches that we bring today, especially with the pressures that were facing, are maximally responsive so that we don't spend years and spend a lot of blood, sweat and tears working on something that isn't going to be relevant to the needs of our people and our economies.”

Duty-free quota

Under the smaller deal that has been agreed, the US will suspend its 25% levy on the first 500,000 UK steel exports each year, and the 10% levy on the first 21,600 aluminium products.

Any steel imports above the duty-free quota will still have to pay the tariff rate, the FT reports.

The deal also requires aluminium importers to certify the origin of raw aluminium to combat subsidised metal from China and other countries, reports the Guardian.

‘Sting in the tail’

David Henig, founder of UK Trade Forum, tweeted that a “sting in the tail” of the deal was an annual strategic audit of any UK steel producer that has Chinese ownership.

This includes the UK’s largest producer, British Steel, which is owned by Jingye Group.

Transatlantic talks

The deal comes after the UK and US completed the first of their ‘Dialogues on the Future of Atlantic Trade’ in Baltimore, exploring how they will collaborate to advance trade priorities, a government read out stated.

Talks included stakeholder roundtables that identified areas where the UK and US can deepen their cooperation on trade, such as:

  • protecting labour rights and the environment
  • promoting supply chain resilience
  • supporting the low-carbon transition
  • making it easier for SMEs to export
  • ensuring the benefits of trade are evenly distributed

A second Dialogue is being planned in Scotland in late April, Reuters reports.