US, UK begin talks on metal tariffs, overcapacity

The US and UK officially began bilateral discussions Jan. 19 to address global steel and aluminum excess capacity and a tariff dispute between the two nations.

"The distortions that result from this excess capacity pose a serious threat to market-oriented steel and aluminum industries in the US and the UK, and to the workers in those industries," trade representatives from both nations said in a joint statement.

The statement was issued following a meeting involving US Commerce Secretary Gina Raimondo, US Trade Representative Katherine Tai and the UK Secretary of State for International Trade Anne-Marie Trevelyan.

Regarding trade between the two countries, the representatives agreed to resolve issues stemming from the US' Section 232 steel and aluminum tariffs on imports from the UK and the UK's retaliatory tariffs on certain US exports.

"[The trade representatives] agreed that, as the US and the UK are close and long-standing partners, sharing similar national security interests as democratic market economies, they can partner to promote high standards, address shared concerns and hold countries that practice harmful market-distorting policies to account," the statement said, adding that overcapacity in China particularly posed a threat to the global market.

The trade representatives will seek a prompt resolution to address global excess metal production capacity and the "deployment of effective solutions, including appropriate trade measures, to preserve our critical industries," according to the statement.

The US began talks with other world governments in 2021 concerning overcapacity and trade disputes in the steel and aluminum industries. In October, the US modified its Section 232 tariff program to allow a certain volume of metal shipments from the EU to enter the US duty-free under a quota.

The Section 232 tariffs were imposed on most countries in 2018 under former President Donald Trump.

US industry cautious of tariff changes

The American Iron & Steel Institute, a trade association that represents the US steel industry, said the US must be wary that any new trade agreements with other governments do not lead to a steel import surge.

"Steel imports into the US rose an estimated 49% in 2021," AISI CEO Kevin Dempsey said in a Jan. 19 statement to S&P Global Platts. "Given these substantial increases, we think it is essential that the administration ensures that the various new agreements it is considering do not result in a flood of imports that could undermine the goal of the Section 232 program to maintain a healthy domestic capacity utilization rate."

Dempsey said the AISI looked forward to consulting closely with the Commerce Department and the USTR as further discussions continue.

UK Steel welcomes talks

Trade association UK Steel welcomed the beginning of discussions with the US that signal the possible removal of the US' steel and aluminum tariffs on UK exporters.

"With the recent removal of US tariffs on EU produced steel, UK producers currently face a 25% price disadvantage compared to their EU competitors," UK Steel Director General Gareth Stace said in a separate statement Jan. 19. "As such, we hope that the US and UK negotiators work together in a spirit of cooperation to deliver a deal and remove these unnecessary barriers to trade."

According to UK Steel, the US is the UK's second largest export market, and the Section 232 tariffs have reduced UK exports to the US by nearly 50%.

"We hope the UK Government can put its new independent trade powers to full use, building on the terms of the EU's deal and delivering the best possible outcome for UK producers," Stace said.

International steel trading sources, however, recently indicated to Platts that the EU's greater access since Jan. 1 to the high-priced US steel market has already benefited UK steelmakers due to diversion of EU steel away from both the UK and some other nations, enhancing sales opportunities for UK steel.

The UK produces 7 million mt of crude steel a year, around 70% of the nation's annual requirement, and typically makes a GBP1.7 billion ($2.32 billion) direct contribution to the UK's balance of trade, according to UK Steel.