What Trump’s steel tariffs could really mean for the UK

The days when the UK economy was dependent on metals are long gone, writes Chris Blackhurst – but slapping us with 25 per cent tariffs on steel and aluminium may just be the US president’s opening gambit...

There was a time when the threat of the US imposing a 25 per cent tariff on steel imports might have sent the FTSE stock market index into freefall. Not any more.

Today, the news of Donald Trump’s promised strike failed to rattle UK shares. They even rose, buoyed by stake-building in BP from an activist investor.

The days when the UK economy was dependent on metals and manufacturing are long gone.

Still, there is no doubt we could do without the president’s manoeuvring. It all adds up, and at present, the last thing the UK needs is further blows.

Indeed, as the new ambassador to Washington prepares to take up cudgels with the Trump administration on our behalf, high in Peter Mandelson’s in-tray will be Trump’s latest pledge to impose hefty charges on all steel and aluminium coming into the US from abroad.

US president Donald Trump talks to journalists aboard Air Force One (AP)

As ever with the new commander-in-chief, the news was delivered in his typical bravura manner, aboard Air Force One, talking to reporters on his way from Mar-a-Lago to watch the Super Bowl.

As usual, it invited more questions than it provided answers. Was he serious? Had it been thought through? Can he stomach the subsequent inflation it will cause in the US? Will he temper his comments with a subsequent climbdown? Is it a negotiating ploy?

As yet, we don’t know. Perhaps tellingly, it was not only the UK that shrugged off the announcement – markets in Europe and Asia also rallied.

Unlike the UK, Europe and Asia are more directly in Trump’s crosshairs. But the world remains jittery.

At the very least, this president is determined to provoke a shake-up; to stop what he considers to be cheap foreign goods from flooding his country, undermining US jobs; and to ensure that those who export to the US pay fairer dues.

It was no coincidence, either, that steel and aluminium were singled out. In 2023, the US imported $109.5bn (£88bn) worth of the metals, with the lion’s share hailing from Canada, China and Mexico. The UK’s contribution was small, below that of the next highest, South Korea, as well as Brazil, Germany, Vietnam, Thailand and the UAE.

What is not lost on the diplomats and the industry is that, in the same year, the US also exported $57.6bn of steel and aluminium.

So, while Trump, as he sees it, is championing his domestic producers and helping to safeguard US workers, some of them, especially those that rely on overseas sales, are bound to suffer as other countries retaliate with their own levies.

Nothing is quite what it seems with Trump. There he was, being the big man to the journalists on the aircraft. But in fact, he was only repeating what he had done in his first term. Back then, he slapped a 25 per cent tariff on steel and 10 per cent on aluminium, before relenting and exempting several trading partners, including Canada and Mexico.

The EU also hit back, with levies on all manner of US imports, including bourbon whiskey, Harley-Davidson motorbikes, and motorboats.

Trump’s successor, Joe Biden, was forced to renegotiate, agreeing with the EU to replace the tariffs with a quota system, which allowed for the duties to be reintroduced this year if talks between the two sides stalled. Trump 2.0, you see, is doing what he did before, and what would have happened anyway should Biden’s replacement as presidential candidate, Kamala Harris, have prevailed.

That’s not how Trump presents it, of course. But that’s why the UK government did not appear unduly frazzled this morning. The mandarins ran their calculations and prepared their briefings, and the message from on high was to “wait and see” how we will be affected. Only around 5 per cent of the steel and 6 per cent of the aluminium we still sell abroad goes to the US.

True, the UK has recently formed a new steel council to try to bolster a sector that was already struggling in the face of furious global competition. Again, though, with this president, much of what he does is transactional. So, there is talk that in return for watering down our Online Safety Bill to appease his US “tech bro” friends, he would free the UK from his tariffs onslaught.

Ministers are cautioning against such speculation, but it shows that where Trump, steel, and aluminium are concerned, this could well be the opening gambit – and there is much to play for.