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New trade deal could spell trouble for Port Talbot steelworks

03 Jan 2022 3 minutes Read
Port Talbot steelworks. Photo by Steven Vacher, licensed under CC BY-NC-ND 2.0

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.

Financial support

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.”

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hdavies15
hdavies15
21 days ago

“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.” Well pumping equity into a business does not automatically deliver profits, although it should underpin a turnaround sooner rather than later. However the point that doesn’t get debated here is that the UK, and even dear little Wales, should focus on making as much steel as it can to meet its domestic market requirements. “miles travelled” matters whatever the product or service delivered, and surrendering those products to producers… Read more »

Paul Ap Morgannwg
Paul Ap Morgannwg
21 days ago
Reply to  hdavies15

‘Dear little Wales’

It’s the largest steelworks in the U.K.

Dear Little Wales powered the industrial revolution.

How patronising

hdavies15
hdavies15
20 days ago

You obviously don’t do irony. Given that its the largest steelworks in the UK how would you set out to ensure that its pre eminent position is retained and exploited to long term advantage ?. What steps ( other than tariffs) can be taken to reduce dependency on steel shipped around the world into UK markets ? What steels do we use in UK that cannot be sourced here currently, and what investment might reduce or eliminate that dependency ? Right now all I’m reading is bleating about the bad hand Wales is being dealt yet again. The matter of… Read more »

Gareth
Gareth
21 days ago

The people of Neath Port Talbot must be happy with this news. The EU were protecting the steel industry and the UK Gov were against moves to block cheap Chinese steel flooding the market, the people voted by 57% for Brexit so they are getting what they voted for. The EU has a trade deal and are helping steel making, and the UK has no deal and are not helping.

William
William
17 days ago
Reply to  Gareth

57% on what turnout?

Steven
Steven
16 days ago
Reply to  Gareth

This is not true the German steel industry has collapsed as will the whole eu
They will allow cheap Chinese steel in but at a health and safety cost wait till they build with poor quality steel
You al might not like it but steel products from port Talbot and the rest of britian is and was THE BEST

Cai Wogan Jones
Cai Wogan Jones
21 days ago

The stance of the US on steel tariffs is a direct consequence of Johnson reneging on Good Friday Agreement Northern Ireland Protocol commitments.

The US are co-guarantors of the GFA and they have a special relationship with Ireland. How could Johnson possibly think he could get away with such bad faith?

Who bears the brunt? The communities of Neath-Port Talbot and Wales

Last edited 21 days ago by Cai Wogan Jones
Y Cymro
Y Cymro
21 days ago

The Tories are fanatical with their Brexit at all cost mentality. And it’s Wales economy that will be the Conservative cannon fodder.

I can sadly predict that Tata Steel in Port Talbot will eventually go like all the other industries in Wales the Tories have destroyed leaving thousands of the scrapheap as done with the mining communities in the 1980s by Thatcher’s regime.

Steven
Steven
16 days ago
Reply to  Y Cymro

I think and hope it will stay and be safe for years to come as it provides the best steel in the world
I not sure who will help us when it’s gone as you say and we are left with low quality cheap steel
I hope this will never happen

Kerry Davies
Kerry Davies
21 days ago

“Second homes, walking distance of beach, apply Sandfields council.”

Paul Ap Morgannwg
Paul Ap Morgannwg
21 days ago

Get Independence from England.
Get own deal with EU and USA.
Charge England appropriately for water and second homes.
Lovely.

Jack Bryn
Jack Bryn
20 days ago

Brexit realities are now kicking in. Those Tata employees who voted Leave must be over the moon as they enjoy their new found freedom and sovereignty.

hdavies15
hdavies15
20 days ago
Reply to  Jack Bryn

Dismissing likes of Tata employees as “Brexit voting thickos” may make you feel better but doesn’t achieve much else. Is it too far fetched to imagine that those people genuinely thought that people in government and the upper echelons of British industry would have devoted more time and collective intellectual horsepower to planning and preparing for Brexit ? Of course we know with hindsight that most of the period after June 2016 was wasted while politicians slagged each other off ( much easier after all than thinking things through).The captains of industry on their 6 and 7 figure salaries dithered… Read more »

Steven
Steven
16 days ago
Reply to  Jack Bryn

Oh really if port Talbot closes don’t buy a fridge freezer or a car you will have cheap steel
But it maybe what you want good luck

William
William
17 days ago

Does Port Talbot not make its own power from BF gas and coke oven gas made from the low grade coal they import to make coke for the blast furnaces
TaTa crying wolf again. They did this with the pension and when they were allowed to get rid of it the miracle the start making large profits while the pensioners were disadvantaged. The pulled the wool over the FCA and government. This action needs to be re visited to share the profits with the pensioners.

Marc
Marc
17 days ago

Hopefully it’s gone real soon it’s a pollution zone in Wales and a co2 emmitter.

Steven
Steven
16 days ago
Reply to  Marc

Oh my god
I bet you drive needless miles in your car

Steven
Steven
16 days ago
Reply to  Marc

This plant employees thousands and has a lot of praise for what it does for the environment yes it’s pollution but show me a place that produced steel without pollution
And by the way once port Talbot is gone as you say don’t come crying when fridges washing machine cars cost more

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