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The UK government is looking at hitting totemic American products with tariffs if Britain fails to win a carve out for steel and aluminium from 25 per cent US tariffs.
Jonathan Reynolds, business and trade secretary, said on Sunday that if US President Donald Trump did impose the hefty import taxes on British steel and aluminium, that could see a return of UK tariffs on US products including whiskey, jeans and motorbikes.
Previous targeted tariffs on US-made products were suspended under a deal agreed in March 2022 by the Conservative government with the Biden administration, which saw the reopening of tariff-free access for UK steel and aluminium exporters to the US.
Reynolds said that if Trump reimposed the US tariffs, that deal would “fall away”, telling the BBC “we would revert back to that position”.
He insisted that no decisions had been taken and he did not believe that this would happen. He was hopeful there would be exemptions for UK steel and aluminium exports. “I believe there’s a basis for constructive engagement,” he said.
Reynolds said that the steel the US imported from Britain was “highly specialised” — for example steel made in Sheffield and used by the US Navy for submarine casings — and that there were no alternative suppliers.
Douglas Alexander, trade secretary, has said that British steel exports to the US were worth about £400mn and that tariffs would be a “significant blow”, but Downing Street has noted that they amounted only to about 5 per cent of total UK steel exports.
Ministers are anxious to avoid any escalation of a trade dispute with Washington and are trying to minimise tensions ahead of a visit by Prime Minister Sir Keir Starmer to the White House later this month.
Starmer will attempt to persuade Trump not only to exempt UK steel and aluminium from tariffs but to avoid the application of wider trade sanctions on Britain.
Reynolds rejected Trump’s claim that value added tax — Britain’s sales tax — was a tariff. “I would not see VAT as a tariff,” he said, adding that the US also had sales taxes.
Reynolds’ comments came as the government brought forward a consultation intended to secure the long-term future of the UK steel industry, looking at issues such as high electricity costs, unfair trading practices and scrap metal recycling.
The Labour manifesto committed the government to putting up to £2.5bn towards supporting the steel industry through the National Wealth Fund.
Reynolds said the money would be spent on initiatives that would gave the industry a long-term future — such as electric arc furnaces. Talks over the future of the British Steel plant at Scunthorpe are continuing.
Reynolds said the “Plan for Steel” consultation would “examine electricity costs for steel companies” to make the sector internationally competitive and encourage the use of domestically-produced steel in projects such as a mooted expansion of Heathrow airport.
