Britain is hoping to complete a trade deal with the US in the next two weeks to avoid President Donald Trump’s vast new tariffs on steel, Prime Minister Keir Starmer said Wednesday.
The UK was granted an exemption from America’s higher 50% levy on global steel imports that took effect overnight, while Starmer’s team negotiates the details of a tariff-relief deal announced in the Oval Office last month.
“We’re the only country in the world that isn’t paying the 50% tax on steel — and that will be coming down, we are working on it, to bring it down to zero, that is going to happen,” Starmer told the House of Commons on Wednesday during his weekly session of prime minister’s questions. Probed further, he said “let’s come back to this in just a couple of weeks when we’ve implemented it.”
With the UK steel industry warning British jobs and steel facilities are at risk amid uncertainty over access to their second biggest export market, the government is straining to eliminate the current 25% tariff rate as soon as possible.
But the White House proclamation implementing the new, doubled rate while excluding the UK, reserved the option of applying it to British steel and aluminum if the president decides the UK isn’t complying with their agreement. It imposed a July 9 deadline for the UK to meet US demands on matters including the ownership of a plant currently held by a Chinese company.
Starmer faced criticism from opposition parties after the new US policy on steel cast doubt over one of the biggest benefits to the UK from last month’s proposed deal.
“Two weeks ago he was crowing about his historic trade deal,” Conservative leader Kemi Badenoch said in the Commons, adding that now the steel industry could suffer high tariffs unless Starmer “does exactly what President Trump tells him to.”
Liberal Democrat leader Ed Davey said “the prime minister thought he’d secured 0% tariffs for British steel, but now Trump is threatening us with 50% unless we comply with his new five-week deadline. This is classic Trump, changing the terms of a deal he had already agreed.”
Starmer said last month’s deal is “crucial for British jobs,” adding that his Labour government is fighting “tooth and nail for the British steel industry.”
The US-imposed deadline ramps up the pressure on British trade negotiators, who have spent recent days trying to get the US to commit to a time-line for resolving unfinished aspects of the deal, such as the tariffs.
The longer UK steel and aluminum exports are subject to US tariffs the more questions will be raised about Starmer’s decision to become the first country to settle with Trump. The Prime Minister’s Office had promised while announcing the agreement on May 8 that US levies would be reduced to zero on the metals, saying the deal would save an industry that it described as being on the “brink of collapse.”
Business Secretary Jonathan Reynolds met US Trade Representative Jamieson Greer late Tuesday in Paris in an effort to speed up talks. They discussed “implementing agreements on sectoral tariffs as soon as possible” and “agreed that businesses and consumers on both sides of the Atlantic must start to feel the benefits of the deal soon,” according to a statement from Reynolds’ department.
The UK steel industry has warned repeatedly that tariffs on US imports could further imperil the viability of mills already battling against global overcapacity, depressed steel prices and weak demand in many key industrial sectors. The UK exports around 200,000 metric tons of steel per year to the US, worth over £400 million ($532 million), according to UK Steel.
Under the agreement announced last month, the British government said duties on metals exported to the US would be slashed to zero, and auto tariffs would be reduced to 10%. In return, the UK agreed to fast-track US items through their customs process and reduce barriers on “billions of dollars” of agricultural, chemical, energy and industrial exports, including beef and ethanol.
China
The May deal, however, was contingent on the UK satisfying US demands about the ownership of its plants, which appeared aimed at accelerating Starmer’s efforts to take over the Chinese company running the country’s last blast furnaces. Britain took de-facto control of British Steel in April to prevent the closure of its two furnaces, but the loss-making company is still owned by Jingye Group.
The new White House proclamation raises the prospect that Starmer may have to speed up the process of finding a private partner or buyer. While the UK has said that a nationalization of British Steel remains the most likely outcome in the near-term, Starmer’s government has been reticent to act due to the high cost of taking on its losses of roughly £700,000 a day.
The industry “needs to become more attractive for investment,” said Chrysa Glystra, head of trade and economic policy at UK Steel. “This must include key reforms on energy prices, but also more robust trade defence like we are seeing in the EU.” She said UK prices are already under pressure from trade diversion and a glut of global supply.
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