Cheap Chinese imports will flood the market. Even more jobs will be lost, and the country’s industrial base will be even weaker than it already is. UK Steel, the lobby group for the industry, has today called for tariffs to stop the last remaining steel mills being wiped out by unfair competition from lower cost rivals. It would hardly be any great surprise if a protectionist, union-dominated Labour government agreed to that. There is, however, just one snag. The steel industry has already long been neglected – and there is no point in trying to rescue it now.
It is futile to provoke Chinese retaliation against industries that actually make money
Only a week after the last conventional blast furnace was closed at Port Talbot in Wales, the steel industry is warning that the outlook is about to get even worse. It fears a flood of cheap Chinese steel once current restrictions are lifted in 2026. With the US and the EU both imposing tariffs, it argues, much of Beijing’s excess supply will be dumped on the few remaining open markets, of which Britain is one of the largest. The money the British government has already poured into the industry will end up completely wasted, they say.
It is the sort of argument that an instinctively interventionist Labour administration is likely to listen to. After all, it believes in intervening in the market, and having a strong industrial policy, and it also wants to preserve industrial jobs – especially in the party’s heartlands in Wales. Even so, introducing fresh tariffs would be a big mistake. This is because there are two big problems at play.
Our steel industry is already wildly uncompetitive. We have some of the highest industrial electricity prices in the world, with power costing 74 per cent more than in the US, and 34 per cent more than in France. We have closed coal mines, and we are closing down the oil and gas rigs in the North Sea as fast as possible, while imposing green targets on the steel mills. There is no point accusing other countries of sabotaging our steel industry when we have been so determined to destroy it ourselves.
It is also futile to provoke Chinese retaliation against industries that actually make money. The UK has exports worth £30 billion a year to China, growing at 10 per cent a year, with major strengths in financial services, intellectual property and education, alongside more traditional manufactured goods. As the EU is about to discover with the tariffs on electric vehicles it is planning to introduce from next month, China is very good at targeted retaliation against countries that try to impose levies on its exporters. We will damage successful industries with a real future to help failing ones.
The blunt truth is that successive governments have destroyed the steel industry. There is no point thinking a few tariffs on Chinese exporters will save it now.
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