UK targets 50% domestic steel production with new import tariffs

The UK government has unveiled a major intervention in the steel market, setting an ambitious target to produce up to 50 per cent of the steel used domestically while imposing steep new tariffs on imports in a bid to protect the struggling industry.

Under the plans, import quotas will be reduced by 60 per cent from July, with any steel brought into the UK above those limits facing a punitive 50 per cent tariff. The move represents one of the most assertive steps taken by ministers in recent years to bolster domestic manufacturing capacity amid intensifying global competition.

Announcing the measures in Port Talbot, Business Secretary Peter Kyle said the strategy was designed to both strengthen UK industrial resilience and counter what he described as “anti-competitive behaviour” in global steel markets.

He confirmed the government aims to increase the proportion of British steel used in the UK economy from around 30 per cent to 50 per cent, although no specific deadline has yet been set for achieving the target.

The introduction of a 50 per cent tariff on excess imports marks a significant escalation in trade policy. While tariffs are paid by importing firms, the additional costs are typically passed through supply chains, potentially raising prices for manufacturers, construction firms and ultimately consumers.

Ministers insist the policy is not protectionist but rather a necessary safeguard in a market distorted by global overcapacity and subsidised production, particularly from overseas producers able to undercut UK manufacturers.

A transitional arrangement is being considered to soften the immediate impact, with contracts agreed before 14 March potentially exempt from the new tariffs for imports arriving between July and September.

The UK steel sector has broadly welcomed the announcement, having long called for stronger measures to shield it from cheaper imports and volatile global pricing.

Gareth Stace, head of industry body UK Steel, said the strategy represents a long-overdue shift in policy.

He said the UK had lacked a coherent industrial plan for steel for years, despite its central role in national security, infrastructure delivery and the transition to low-carbon energy systems. He added that a clear domestic strategy was essential if the sector is to survive and grow in an increasingly competitive global market.

Trade unions also cautiously backed the move. The GMB said the announcement was welcome but stressed that key questions remain around ownership structures, particularly at major sites such as Scunthorpe, and the long-term technological direction of the industry.

However, the policy has drawn sharp criticism from opposition figures, who argue the tariffs risk increasing costs across the wider economy.

Andrew Griffith warned that higher import costs could ripple through key sectors such as construction, potentially reducing infrastructure investment and placing additional pressure on UK manufacturers already facing tight margins.

The concern reflects a broader economic tension: while tariffs may support domestic producers, they can also raise input costs for downstream industries that rely on competitively priced materials.

The intervention comes at a critical moment for the UK steel industry, which has faced years of financial strain driven by high energy costs, global oversupply and shifting demand.

Although recent government support has helped reduce energy costs for intensive users, UK producers still face higher bills than many European and US competitors. That gap could widen further if global energy markets remain volatile.

Fears are growing that the ongoing conflict in the Middle East could push oil and gas prices higher for longer, increasing operating costs for energy-intensive industries such as steelmaking.

The government’s push to increase domestic steel production also reflects broader strategic concerns. Ministers are keen to ensure the UK retains sovereign capability in critical industries, particularly as geopolitical tensions expose vulnerabilities in global supply chains.

This is underscored by the government’s direct involvement in key steel assets, including sites in Scunthorpe and Rotherham, where public funds are currently being used to maintain operations that might otherwise have ceased.

At the same time, investment in new technology is beginning to reshape the sector. At Port Talbot, Tata Steel is developing an electric arc furnace, which will recycle scrap metal to produce steel with significantly lower carbon emissions — a key component of the UK’s net zero ambitions.

The success of the government’s strategy will ultimately depend on whether it can strike a balance between protecting domestic producers and maintaining competitiveness across the broader economy.

While boosting local production could strengthen supply chain resilience and support jobs, the risk remains that higher costs could dampen demand and investment elsewhere.

For now, the policy signals a decisive shift towards a more interventionist industrial strategy — one that places steel at the heart of the UK’s economic, environmental and national security priorities.

Amy Ingham

Amy is a newly qualified journalist specialising in business journalism at Business Matters with responsibility for news content for what is now the UK’s largest print and online source of current business news.