When Jonathan Reynolds announced sweeping tariffs this summer to protect British steelmakers from a flood of cheap imports, the reaction seemed almost universally positive.
“This government makes no apologies for our support of Britain’s steel sector,” said Reynolds, then business secretary, pledging to defend a “vital industry that underpins Britain’s industrial strength and national security.”
Gareth Stace, director general of industry body UK Steel, hailed it as “a huge result” that would prevent foreign producers “flooding the UK and driving our steelmakers out of business”.
But behind the scenes, the luster of unity quickly faded. Letters, emails and board minutes obtained by The Sunday Times reveal an industry at war with itself – primary steelmakers and smaller producers accuse each other of self-interest as tariffs reshape Britain’s metals economy.
On the one hand, there are the most important steel producers: heavyweights such as Tata Steel, British Steel, Celsa and Specialty Steel, which together employ around 10,000 workers and produce semi-finished products such as billets, slabs and blooms. They argue that protection is essential to protect British production from state-subsidized steel from Asia, particularly China.
On the other side are the “downstream” steel users – the companies that take these semi-finished products and turn them into everything from metal discs and car parts to construction fabrics and polished kitchen countertops. Together they support more than 300,000 jobs, and they say the new tariffs are pushing them to the brink.
Their argument is simple: by making imported steel more expensive, the government is driving up its costs – in some cases to the point where manufacturing it in Britain no longer makes economic sense.
“British steelmakers are deliberately and consciously trying to harm downstream companies, even if some are their customers,” said Stephen Morley, president of the Confederation of British Metalforming (CBM), which represents 200 companies employing 70,000 people.
Morley and a coalition of downstream trade associations – including the British Constructional Steelwork Association, the British Stainless Steel Association and the International Steel Trade Association (Ista) – claim the government’s decision was heavily influenced by Tata Steel, the Indian conglomerate that owns the Port Talbot steelworks in south Wales.
In a letter to trade minister Chris McDonald, Morley claimed that former business minister Reynolds acted after Tata “put a gun to the government’s head” and threatened to withdraw from its £1.25 billion plan to switch from coal-fired blast furnaces to cleaner electric arc furnaces unless tougher import protection measures were introduced.
Tata declined to comment, but UK Steel insists protectionism is necessary given the “existential threat” posed by Chinese overproduction and the diversion of exports via Vietnam and South Korea to circumvent anti-dumping rules.
“We need to introduce greater import controls,” said Peter Brennan, director of trade and economic policy at UK Steel. “This is what the US did. This is what the EU is doing. If we don’t do this, we will lose our steel industry.”
Downstream companies warn that the consequences could impact construction, manufacturing and infrastructure. Britain simply isn’t producing enough steel to meet demand, forcing companies to import – now at inflated prices.
Richard Webster, chairman of the British Independent Reinforcement Fabricators Association, said the UK only produces about 600,000 tonnes of steel reinforcing bars a year, far less than the 1.1 million tonnes needed for projects such as housing and railways.
“Imports play a critical role in maintaining supplies to the construction industry,” he wrote to Trade Minister Peter Kyle. “Tariffs could slow projects and undermine Labor’s growth ambitions.”
Ista’s Simone Draper added that the changes had already caused “disruptions and unexpected costs across the supply chain”.
There are growing fears that further tariff increases – such as the EU’s planned 50% levy and halving of duty-free quotas next year – could, in Morley’s words, “strangle the metal manufacturing supply chain”.
Many companies sit uneasily between the two sides. Philip Jackson, managing director of Bright Steels in North Yorkshire, said his company suffered from and was dependent on cheap imports.
“A one-dimensional approach to protection will punish us,” he said. “We need a balanced policy that supports domestic producers without crippling the rest of the chain.”
To find this balance, Kyle commissioned engineering firm Hatch to map Britain’s steel production capacity and demand over the next 25 years – an attempt to identify which products could be duty-free without endangering Britain’s mills.
For some in the industry, the stakes are more tangible than trading statistics. Kirsty Davies-Chinnock, a stainless steel specialist in the West Midlands, says tariffs threaten the invisible infrastructure that underpins daily life.
“Everyone in the UK comes into contact with my products at least 30 times a day,” she said. “From turning on the light switch, to taking a vitamin supplement, to drinking a cup of coffee – to falling out of a nightclub at 3am and getting a kebab over a polished stainless steel counter. Take that away and you can no longer have coffee, no vitamins – no kebab.”
It is a stark reminder that it is not just blast furnaces and factories at stake in the civil war rocking Britain’s steel industry, but also the thousands of small businesses, contractors and manufacturers who rely on them every day.
