Category 4 Steel Imports: Tariff-free Quotas

Private Notice Question

Asked by

To ask His Majesty’s Government what plans they have to set out details of changes to tariff-free quotas for category 4 galvanised steel imports and; what assessment they have made of the impact of those changes on (1) domestic steel production, (2) employment, (3) investment and (4) supply chains.

My Lords, before I respond to the noble Lord’s Question, I first want to say that in the last couple of weeks, we have been seeing each other across the Dispatch Box quite regularly, and it is arousing some suspicion from my wife.

I welcome the opportunity to respond to the noble Lord’s question. On 1 July 2026, the steel trade measure came into force, and I presented the details to this House on 30 June. The measure limits tariff-free steel imports, including for category 4, and reduces overall quota volumes by 51%, compared to the expired steel safeguard, to 3.2 million tonnes. Any imports above these levels will face a 50% tariff. The details of this measure have not changed since my Statement on 30 June.

My Lords, we should not have had to read in the Financial Times earlier this week that the Government had made specific changes to the steel tariff regime for a particular country, India, following negotiations over one of the United Kingdom’s most important trade agreements. I welcome the opening words of the Minister, and I always enjoy exchanges with him in this Chamber. But Parliament should surely not be learning from the media that the Government have made specific changes to the steel tariff regime for any particular country following negotiations over one of the United Kingdom’s most important trade agreements.

The Ministerial Code is clear that major policy announcements should be made first to Parliament when Parliament is in session. Will the Minister explain why Parliament was not told the full details of any further India-related changes before the tariff regime came into force on 1 July, and will the Government now commit to making a Statement while your Lordships’ House is in session, setting out what changed, why it changed, and what assessment was made of the impact of these changes on domestic steel producers, downstream sectors, exporters, supply chains, investment and jobs?

My Lords, I will just say to the noble Lord that it was a pretty good try. First, there has been no change to India’s category 4 quota compared to the provisional quota published in April 2026. We did not negotiate quotas with any countries apart from our agreed outcome with the EU. We have been engaging with India on steel, as we have all our trading partners. Overall, quotas reflect the need to balance stronger protection for UK producers with continued access to critical inputs for downstream sectors and critical national infrastructure.

My Lords, nearly 40,000 people are involved in steel production in this country. However, 400,000 people are involved in manufacturing as a byproduct from steel. It is really important that both sides of that industry are protected. My fear is that these tariffs may actually affect badly the manufacturing side of the industry; I seek reassurance from the Minister that this will not happen.

My Lords, first, employment impacts form part of the Government’s wider assessment when determining any future steel trade measures. Our objective is to protect jobs throughout the steel supply chain, both in primary steel production and among downstream manufacturers. We continue to engage closely with producers, manufacturers and trade bodies to monitor market conditions. Where evidence suggests unintended consequences, we will continue to review the operation of the regime to ensure it remains proportionate and effective.

My Lords, while there is a case for protection for speciality steels for sectors like the nuclear industry, surely the Government’s wider policy on quotas and tariffs is harmful to British industry as a whole. The awkward reality is that the domestic steel industry cannot supply the total demand in this country. Imports have to happen and account for 60% of production in this country. If we do not allow those imports into this country, free of tariffs and quotas, it penalises those who are making finished products, who have to compete with imports which are finished and do not bear this taxation at the border. This is deeply harmful to British industry.

I thank the noble Lord for the questions. I think I responded to the noble Lord on Monday on a particular Urgent Question on steel and addressed the tariff issue. However, I will address his point about imports. We have carried out a programme of extensive engagement with industry, as well as negotiations with the EU ahead of its own steel measure coming into effect. Some 74% of all imports by volume fall outside the scope of this measure and will not be subject to any tariffs. For other products, tariffs will only be due once quotas have been exhausted. We will continue to hear from businesses and closely monitor the impact of this measure. We will also review it after 12 months to ensure it remains effective and that the balance is right for both producers and downstream users.

My Lords, I welcome what the Government did in protecting the steel industry in this country, but do we not need to do a lot more to develop our resilience and reduce our dependence? Was the danger here not of Chinese domination of the industry? The Government were right to act. In that context, will the Minister say what compensation has been paid to the Chinese regime? On the point made by the noble Lord, Lord Hunt, about learning things from the media, was the Times accurate when it reported that China had offered debt relief in return for a green light for its proposed mega-embassy in London?

I will first address the issue on British Steel, which I am sure is what the noble Lord is referring to. We took British Steel into public ownership immediately after we passed the Steel Industry (Nationalisation) Act. As it stands, under the Act, we will appoint an independent valuer to assess the compensation, if any, that is due. As far as we know, it is zero compensation and that is where it stands. As for his question on the Chinese embassy, I am not aware of that, but I will find out and write to him.

My Lords, the Minister will be aware, from our earlier discussion on the steel legislation that went through this House, of my concern relating to the availability of steel for defence purposes. Can he give an assurance that in considering these changes the Government have given full attention to the reliability and dependability of supplies for defence purposes, particularly in circumstances where the defence pressures may be different from our current peacetime ones?

I remember our exchanges across the Dispatch Box. As I said then, I will say now that we are mindful of the specialised steel used in any of the industries that require a speciality type of steel. We will monitor the usage but, as it stands, any steel that is not manufactured in this country—which is imported—is outside the scope of the tariff.

My Lords, I am grateful to the Minister for his answers. He is always informative, courteous and diligent at that Dispatch Box. If it is true that we have, as reported, widened the quota for India, we have presumably done so on two very sensible grounds. The first is good relations with India. This is a really important trade deal, and we can hardly renege on it when the ink is barely dry. The second is that we want to boost our domestic economy and, as the noble Lord, Lord Lamont, says, we do not want to place British manufacturers at a relative disadvantage vis-à-vis the rest of the world by forcing up their input costs. Why does that apply only to India? Should we not take the same approach to our trading partners in the Trans-Pacific Partnership, the GCC, the European Union and elsewhere? Of course, the real answer is to cut energy costs but, until we get there, it does seem crazy that we are going down this Trumpian route of having these immensely high tariffs, which always serve to the detriment of the industries they are supposed to protect.

I thank the noble Lord for those kind words. We do not import steel only from India. In fact, the largest import of steel is actually from the EU, followed very closely by Vietnam, then India, and not forgetting South Korea. Those are the principal importers of steel into this country. As I said earlier, we have not changed the quotas as far as India is concerned. We continue to engage regularly with India and with Tata, which is owned by an Indian company, on the usage of steel in this country.

My Lords, following on from the noble Lord, Lord Hannan, why does the Minister think that the overwhelming majority of economists say that tariffs harm the economy?

I refer the noble Earl to other countries such as Canada and the USA, and to the EU. We are not the only country that has import tariffs. When a particular sector is impacted and it impacts on our domestic supply, it is right to have tariffs in place to protect the domestic sector, which in turn protects jobs and, I would hope, creates growth.