Trump’s tax rise could hit U.K’s steel industry
U.S. President Donald Trump’s decision to impose new taxes on steel and aluminum imports caused great concern in the U.K.’s already troubled steel industry.
Trade Secretary Liam Fox will make an official visit to Washington to discuss options for the U.K. steel industry. According to a BBC story on March 9, the U.K. will most likely seek an exemption from Trump's tariffs on steel and aluminum imports.
“We understand the anxieties about steel over-production that the United States has but we believe there are other ways to tackle that on a multilateral basis,” Fox said.
The U.K.’s steel industry is already encountering problems mainly due to the rise in Chinese production, making British steel difficult to compete in the market.
Almost half of the world’s steel is currently produced in China. The period between September 2015 and March 2017 was the most difficult for the U.K’s steel industry with a crisis that caused the industry to lay off 7,000 people or nearly a quarter of the workforce in the steel industry. With the government’s help, the U.K. steel industry showed signs of recovery. However, the U.S.’ move to increase the tax on steel and aluminum imports is definitely not considered good news for the U.K.’ steel sector.
"Slapping a 25 percent tax on steel from British companies going to hit us hard. It worries me that I don't think the Trump administration has quantified what it can supply from its own market and what it can't. Therefore, it is actually shooting itself in the foot by increasing costs to the U.S. steel sector and U.S. manufacturing sector by 25 percent," Gareth Stace, director of U.K. Steel said last week.
It will be important that Fox comes back to London from his U.S. trip with some compromises, possibly an exception favoring British steelmakers. If not, another chess move on the U.K.’s behalf in the form of reciprocal tax increases on U.S. imports could be made.