New trade deal could spell trouble for Port Talbot steelworks
Forecasters are predicting more pain for the steel industry in Wales after new import tariffs agreed between the USA and EU start to take effect.
Trade talks between the EU and USA in October resulted in an agreement to remove tariffs on a quota of steel and aluminum imported into the US from 1 January, giving exporters based in the EU a 25% price advantage over countries outside the bloc.
The UK government has so far failed to secure a similar post-Brexit deal to remove the tariffs which were introduced by former president Donald Trump in 2018 to protect the US steel industry.
The deal could also impact exports to Europe due to a clause that means steel originating in the UK will still attract the tariffs even if worked on and exported by EU companies.
The UK’s international trade secretary, Anne-Marie Trevelyan, has convened a new round of talks with the US commerce secretary later this month, however industry sources said they were not optimistic that a deal would be reached quickly.
Last September Tata Steel, which owns the Port Talbot steelworks, reported a £347m loss over the previous 12 months despite almost £1bn of equity being pumped in by its parent company.
The company has been in talks with the UK government seeking financial support since last year when output at the plant slumped by 20% once the Covid pandemic struck.
Although manufacturing has subsequently bounced back, steel prices are near all-time highs but the industry is struggling to capitalise as they’re also being hammered by high energy prices.
The Port Talbot plant is the largest steelworks in the UK and employs approximately 4,000 people.
Gareth Stace, director-general of UK Steel, told the Guardian: “UK steel exports to the US have halved since President Trump introduced steel tariffs in 2018. There can be no doubt these measures have significantly harmed the UK’s interests in its second biggest steel export market.
“Whilst we welcome the move by the US to start easing its tariffs, without a UK deal in very quick succession, our export position will only deteriorate further. It is essential that the government strains every sinew to secure a deal and ensure that UK steelmakers are able to sell their steel into the United States.”
Harish Patel, the national officer for steel at the trade union Unite, added: “It is alarming that British-produced steel is being effectively locked out of the critical steel market, as the continuing tariffs make EU steel considerably cheaper.
“The government has to sort this matter out quickly. Unless the tariffs are speedily lifted, hundreds of jobs in the steel and associated industries, most of them in so-called red wall seats, are at risk.”