Steel Tariffs

12.40 pm

(Urgent Question): To ask the Secretary of State for Business and Trade if he will make a statement on steel tariffs.

May I start by giving the apologies of the Minister for Trade, who is in Turkey, negotiating further trade deals for British industry?

On 19 March, the Government set out the UK’s plan to introduce a robust new trade measure from 1 July. It will limit tariff-free steel imports, as compared with the steel safeguard measure. Any imports above the levels in the measure will face a 50% tariff.

Protecting primary steel production is crucial to the UK’s critical national infrastructure and defence. That is why we have published a long-term plan for steel and are introducing a new trade measure countering the unprecedented and damaging effect of global overcapacity. It is simply wrong that only 30% of the steel that we need in the UK is made in the UK.

Steel is essential for advanced manufacturing and engineering, and the interests of the domestic steel sector and downstream industry are best served together. A thriving steel industry strengthens supply chain resilience for downstream businesses and limits their exposure to global supply shocks. We need to balance the need to protect domestic steelmaking with maintaining secure, reliable supply chains for downstream businesses.

Imports will remain important. The Government have engaged extensively with businesses across a range of sectors, including manufacturing, when developing this measure. Indeed, last week, I held a roundtable with downstream industry, together with my hon. Friend the Minister for Trade. We, and the Secretary of State, also heard from several colleagues about the concerns of businesses in their constituencies. We are listening carefully to companies throughout the supply chain as we finalise the measure.

I thank the Minister for that statement.

Aerospace, the automotive sector, Formula 1, the construction sector, and manufacturing businesses that use steel, which employ 300,000 people, are all being impacted by Labour’s botched tariffs. Many specialist steels—the Minister may have heard this from manufacturing businesses—are not, as it stands, even produced in the UK. That is a real issue when it comes to, for example, categories 14 and 27, which are used in aircraft wings, or in defence applications that we need to make ourselves safe. Where defence companies have cost-plus contracts, the tariff on steel that is not made here will just get added to the bill for the Ministry of Defence.

Will the Minister listen to Stephen Morley, president of the Confederation of British Metalforming, who says:

“The UK risks accelerating the decline of its manufacturing base rather than preserving it”,

or Simon Boyd from REIDsteel, a British steelmaker, when he says that these measures will kill off

“downstream customers of steelmakers in the UK”?

I am sure that is not the Minister’s intention, but with just two weeks to go, with respect, it is time to stop listening and start acting.

Will the Minister answer three questions? First, will he confirm today that the measures will not be applied retroactively throughout the whole life of existing, agreed contracts? Secondly, will he exempt steel—especially in categories 14 and 27—that is simply not made here in the necessary volumes? Thirdly, after listening to industry, will the Government please delay these tariffs for at least six months so that they can get this right?

In line with your guidance about constructive debate, Mr Speaker, I am sure we will have some constructive debate now. The shadow Minister has raised some legitimate questions, and I am very happy to provide the answers.

I think we all recognise the importance of the steel industry and the downstream sector—there is definitely a point of agreement there. The point about timing is a critical one, and on the face of it, the request for a delay is not unreasonable. The important thing to recognise is that our steel safeguard measure expires on 30 July. It is not possible for us to extend that measure; it has lasted for eight years, and under World Trade Organisation rules we cannot extend it, so new measures are required. Of course, the EU is introducing a new measure on 1 July, and the US and Canada have also introduced new measures. If we were not to introduce a measure, the UK would become the global dumping ground for subsidised steel. That would be the end of our primary steel industry, so something needs to be done.

In designing the measures, we have been very careful to ensure that they are targeted at those steels that are made, or could be made, in the UK. However, the categories are quite broad, and we acknowledge that some steels that are not, and could not be, made in the UK could be swept up in them. That is the point of the quotas. Since our draft measures were published, we have consulted extensively with industry—I have known Steve Morley for a very long time, and I listen very carefully to what he says, but more than that, we have carried out extensive consultation. The Minister for Trade and I have met the downstream group on three occasions, and I have met the Aerospace Growth Partnership, the Construction Leadership Council and many other businesses. We will be publishing our final measures in line with our EU negotiations when they are completed, in time for 1 July.

I call the Chair of the Select Committee.

I am grateful for this urgent question. Today, I am publishing the Committee’s correspondence with Ministers after the roundtable we held with steel producers, expressing a very high degree of alarm that these measures were not in the right place and thousands of jobs are now at risk.

There is a loophole for the import of fabricated steel. Canada and the United States have both moved to close that loophole; there is a question about why we have not taken the same steps. Twelve months is too late. There are no exemptions for steel products that we do not make, as we have heard, and there is no clarity on the use of procurement to drive domestic production. It also appears that a number of the quotas have been set in the wrong place, so will the Minister look again at the advice the Select Committee provided and come back to the House urgently—within the next week—with some adjustments to help safeguard a brilliant industry with a brilliant future ahead of it?

I thank the Chair of the Select Committee for both his work and that of his Committee on this issue. I recognise the concerns that were raised in his Committee earlier this week. On the point about timing, though, while I recognise the uncertainty this causes for business, it is impossible for the Government to announce the final arrangements until our discussions with the EU have concluded. I am reliably informed by those people with knowledge of negotiations with the EU that these things tend to run to the wire, so while I appreciate that it creates uncertainty, we need to wait until that point. However, the feedback from industry about quota levels has been heard by Government, and we are looking at those quota levels. That was the point of publishing the draft measures in the first place.

I call the Liberal Democrat spokesperson.

The steel sector is a vital UK industry. We must support it in the face of numerous challenges, including China’s unfair practices and Trump’s trade war, but I am extremely concerned about the impact on parts of the steel industry supply chain if these proposed tariff changes are implemented. We all want businesses to buy British, but that is just not an option if there is no domestic supplier that can meet the grades and certifications that its customers require. Businesses simply cannot buy British, and will be punished by new tariffs as a direct result. The specialist steels needed by aerospace, defence and precision engineering are not made in this country in the grades or volumes that those sectors require, and qualifying a new source takes not a fortnight, but several years. The Government are already having sufficient difficulty funding their defence investment plan without loading additional costs on to the defence manufacturers. Tariffs on steels not available in the UK will materially damage downstream manufacturers, with serious implications for their competitiveness, as well as for investment and jobs.

What response did the Minister give experts in the manufacturing industry when they warned him about these matters? What conversations has he had with Tata Steel in determining the Government’s tariff position? Will he remove categories from the regime where no domestic production capability exists, such as product codes 14 and 27, which are critical for the viability of many aerospace and defence manufacturers? Will the Secretary of State commit to delaying or tapering implementation until proper mitigations have been put in place?

I thank the hon. Member for her constructive engagement on this issue with me over the past few weeks. The nub of her question is, I think, about domestic suppliers and the availability of domestic supply. As I said, the measures have been designed to cover those steel categories that are made or could be made in the UK. She raises the particular issue of speciality steels. We all understand the position with Speciality Steel UK in Stocksbridge and Rotherham. That business is going through administration, and it was impossible for it to compete in the UK while there was an influx of subsidised steel.

The hon. Member asks about the conversations I have had with industry. I will tell her what I said to the Aerospace Growth Partnership. When I met it this morning, I said that clearly we would not want to start from this point, but that it is about choices. This Government have decided that we want to have a full aerospace supply chain, including our own speciality steels production. That is a different choice from the one that the previous Government made when they were approached by industry, offering to co-invest in that site and keep it open. They rebuffed all those responses, because their view was, “Leave it to the market, let the steel plants close.” We are making a different choice.

As the Minister knows, I represent Llanwern, which produces galvanised steel. I repeat my ask to the Minister to be mindful of the impact of the scale of the allocations for non-EU countries on Llanwern. Will he continue to liaise directly with Tata and the unions on this issue?

I am particularly concerned about the allocations for galvanised steel, as my hon. Friend says, particularly given the country’s reliance on the ZODIAC galvanising line in Llanwern. That is a critical part of our steel and our national infrastructure. It is the only process route that we have to make car auto body and various construction and coating steels. A lot depends on that plant, and I am considering the issue seriously.

Engineering firms in Kingswinford and South Staffordshire are integral to automotive and aerospace supply chains, so how can it be right or in the national interest that they pay a tariff of 50% on the steel they import and use, while European producers making those parts with the same steel pay low or no tariffs?

I have just been alerted to the fact that I said the current measures will expire on 30 July. It is actually on 30 June. It was hopefully correct in the context, but I am happy to correct the record. On the specific point raised by the hon. Gentleman, these measures are clearly designed to support primary steel production. That is their purpose and what they have been designed for. It is about getting the balance right so that we support that level of primary production in the UK while dealing with the issues with the downstream steel producers so that they can get the steels they need within the UK or perhaps more broadly within the EU, as we discuss our market arrangement measures with it.

We all support greater production here in the UK, but the details of these tariffs need more work. Black Country MPs, such as me and my hon. Friend the Member for West Bromwich (Sarah Coombes), have heard huge worries from our downstream industries, including stockholders such as Amari, fabricators such as Angle Ring, and trade associations such as the British Constructional Steelwork Association and the Cast Metals Federation. Will the Minister go away and review the details? We need protections for fabricated steel, like those Canada and the US have in place. Once again, we are seeing projects in receipt of massive public funding importing fabricated steel. We need a detailed look again at the categories and the quotas. We need proper consultation with UK Metals Council members, and we need to look at the detail again to ensure that it is right and that it supports a great future for manufacturing in the Black Country and elsewhere.

I thank my hon. Friend for the strong work that she has done advocating for businesses in her area. Across the whole west midlands, there has been strong support from west midlands Members of Parliament for their businesses, and quite right too. She may recall from the roundtable discussion we had with the Secretary of State and the Minister for Trade earlier this week that her concerns are being heard and taken into account, and I want to reassure her about that. I neglected to mention earlier the engagement we have had with the British Constructional Steelwork Association, which she mentioned. I reassure her that I and my officials are talking to the BCSA, too.

The Minister says that the concerns about fabricated steel are being taken into account. Can he be a bit more specific about why other countries have protections for fabricated steel in their economies, but we do not yet have any in ours?

I can give a specific example, if that would be helpful. A number of Members have mentioned the specific situation in Canada, for instance, and I have looked carefully at the situation there. Fundamentally, it has a completely different tariff regime, which would not necessarily be straightforward or legal to apply in the UK. However, I continue to look at that. I reiterate the point that this measure is designed to support the steel industry. If other concerns fall outwith that, they need to be raised and dealt with appropriately.

May I add my voice to that of other Black Country Members? On behalf of Stourbridge, Brierley Hill and Netherton, I am grateful to the Minister and the Department for Business and Trade for their ongoing engagement with me and local businesses. It is much appreciated, but can I also add my voice to those calling for a review of quotas? In some places, those have been reduced by more than 80% on products not currently produced here. Equally, we have fabricated products being imported that are not subject to any tariffs, which could impact on local downstream supply chain industries.