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Despite significant trade progress between the UK and the US, Donald Trump has raised new concerns that could undermine the recently signed trade deals. Specifically, Trump is threatening to maintain the 25% tariff on UK steel imports, unless the British government can provide specific guarantees related to the steel production practices at Port Talbot in South Wales, a plant owned by Indian conglomerate Tata Steel.
While the UK and US agreed on tariff reductions for car exports and the aerospace sector during a meeting between Keir Starmer and Trump at the G7 summit in Canada, steel exports from the UK remain under threat. These tariffs were not addressed in the new agreement, and Tata Steel’s Port Talbot plant, which imports raw materials from abroad, is at the center of these ongoing discussions.
The Issue with Port Talbot’s Steel Production
Port Talbot’s steel mill has faced operational shifts since Tata Steel closed its blast furnaces in 2024. Instead, the company has resorted to importing raw steel from Tata’s plants in the Netherlands and India while waiting for the electric arc furnace project slated for 2027. This switch has raised concerns for the Trump administration, as US trade rules dictate that to qualify for tariff exemptions, steel must be melted and poured within the country of origin.
Although Tata Steel is importing raw materials from sites outside the UK, it does not source these materials from China—a significant detail that the British government hopes will be a favorable factor in ongoing talks.
Negotiations and Next Steps
The US administration is reportedly seeking guarantees from Tata Steel regarding the timeline for the switch to domestic steel production at Port Talbot. Specifically, the Trump administration is seeking clarity on when Tata’s new electric arc furnace will begin operations and when the plant will stop importing raw materials.
Additionally, US officials are asking for guarantees regarding the traceability of steel supplies throughout the supply chain. Starmer’s team, hoping to secure a favorable outcome for the UK steel industry, is keen to finalize the agreement next month. Varun Chandra, an advisor to Starmer, is expected to lead a delegation to Washington next week to engage with US officials.
What’s at Stake for the UK
The 25% steel tariff remains a significant burden on UK steel exports, even though the UK is currently exempt from the 50% tariff that other nations face. The UK business department has stated that the two leaders are committed to removing these tariffs but that negotiations will continue on the finer details.
Unions representing the UK’s steel industry are voicing urgent calls for a deal. Alasdair McDiarmid, Assistant General Secretary of the steel industry union Community, stressed the importance of securing a deal for steel as soon as possible. He warned that without a full exemption for all UK steel exports to the US, several leading steel businesses could face uncertainty, potentially impacting jobs and livelihoods.
Key Points from the Article:
- Trump’s threat: 25% tariffs on UK steel imports remain, with the US seeking guarantees from Tata Steel about the Port Talbot site’s production methods and the timeline for its new electric arc furnace.
- Progress on other trade fronts: A new deal to reduce tariffs on UK car exports to the US and scrap tariffs on aerospace products was signed at the G7 summit, though steel was excluded from this agreement.
- Steel negotiations: The US is concerned about Tata Steel’s reliance on imported raw materials and wants more transparency in the steel supply chain.
- Unions’ concern: Steel industry unions are pressing for an exemption for all UK steel exports to avoid potential job losses and industry instability.
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