US Lifts 25% Tariffs on UK Steel and Aluminium: Trade Deal Eases Pressure on Struggling Industry

On May 8, 2025, the UK and US reached a trade agreement removing 25% tariffs on British steel and aluminium exports, easing pressure on the UK steel industry. The tariffs, imposed in 2018 under Trump, had strained the sector. While the deal is welcomed, it requires the UK to meet US conditions on steel supply chain security and production facility ownership. The agreement includes a quota system, and its full benefits depend on further clarity regarding implementation timelines and conditions.

A Lifeline for UK Steel

The removal of the 25% tariffs marks a significant shift in transatlantic trade relations and provides a much-needed boost to the UK steel industry, which exports approximately 200,000 metric tons of steel to the US annually—worth around £400 million. The tariffs, originally introduced by former President Donald Trump in 2018 under national security justifications, had long been a point of contention between the two allies.

Prime Minister Keir Starmer hailed the agreement as a “deal that will protect British businesses and save thousands of jobs in Britain.” The announcement was met with cautious optimism across the UK’s industrial heartlands, particularly in cities like Sheffield, where steelmaking has been a cornerstone of the local economy for centuries.

At Marcegaglia Stainless Sheffield, one of the UK’s largest remaining steel plants, the news was met with relief. “Everything had changed for us,” said Richard Bott, a worker at the plant, which exports over $130 million worth of steel to the US each year. The facility, which uses electric furnaces to melt stainless steel scrap, had been under pressure due to the tariffs and global competition.

Conditions and Uncertainties

Despite the celebratory tone, the deal is not without caveats. The tariff removal is conditional on the UK meeting US requirements related to the security of steel supply chains and the ownership of production facilities. According to the British government, access to zero tariffs will depend on the UK’s commitment to “work quickly to meet U.S. demands” in these areas.

Chrysa Glystra, Director of Trade and Economic Policy at UK Steel, acknowledged the progress but emphasized the lack of clarity. “It’s not as good as if you told us that there are no tariffs on steel as of today. That would be better,” she said. Glystra noted that companies still do not know what specific supply chain conditions must be met or when the tariff exemptions will take effect.

The British trade ministry has so far declined to provide a definitive timeline for the formalization of the agreement, further fueling industry concerns. “There are still many things that haven’t yet been determined and defined,” Glystra added, pointing to the need for clear guidance on quotas and compliance requirements.

Quotas and Derivative Products

The deal also introduces a quota system, though the exact volume of steel and aluminium products that can be exported tariff-free remains under negotiation. The White House has indicated that the UK will be allowed to export certain volumes at “most favoured nation” rates, but anything beyond those quotas could still face duties.

Moreover, it is unclear whether the tariff exemptions will apply to derivative products—such as machinery, gym equipment, and furniture—that incorporate steel and aluminium. These products represent a significant portion of UK exports to the US, valued at approximately £2.2 billion in 2024.

Broader Trade Context

The steel agreement is part of a broader trade pact between the UK and the US that also includes provisions for the automotive sector. Under the deal, the US will reduce tariffs on UK-made cars from 25% to 10% for the first 100,000 vehicles exported annually. This is roughly equivalent to the UK’s current export volume to the US. Vehicles beyond that quota will still face the full 25% tariff.

Commerce Secretary Howard Lutnick confirmed that while the sectoral tariffs on steel and cars have been eased, a 10% across-the-board tariff on UK goods remains in place. Pharmaceutical tariffs, another sticking point in negotiations, have yet to be resolved.

The US is the UK’s second-largest export market after the European Union, and the steel and automotive industries have been among the most vocal in calling for tariff relief. Industry leaders had warned that the 25% levies were “just not sustainable” and could lead to widespread job losses.

Industry Reaction

The response from UK steel businesses has been largely positive, albeit tempered by the need for further clarity. “The fact we have now a better foundation than before is positive,” said Glystra. However, she stressed that the benefits of the deal would only materialize once the terms are fully defined and implemented.

British Steel, which was recently brought under government control to prevent collapse, stands to benefit significantly from the tariff removal. The company had struggled to remain operational under the weight of the US levies and global overcapacity.

Still, the industry remains cautious. “There are a number of hoops to jump through before the UK steel sector can see the benefits of this deal,” said a spokesperson for UK Steel. “Firms need to know what supply chain conditions need to be met, what the quotas are, and when they take effect.”

US Lifts 25% Tariffs on UK Steel and Aluminium: Trade Deal Eases Pressure on Struggling Industry

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