British steel has been handed a lifeline after Heathrow airport announced a multi-billion pound investment, including commitments that will safeguard thousands of jobs in the industry amid the threat of Donald Trump’s tariffs.
The airport will build new terminal buildings, aircraft stands and passenger infrastructure and has signed a charter that commits to using UK-made steel for its construction projects where possible.
The Government welcomed the investment, adding that it was expected to secure thousands of steel jobs in the UK by boosting demand, as industry figures privately warned ministers that Trump’s plan to hit the metal with 25 per cent tariffs would have a punishing impact – with suggestions it could deliver a fatal blow.
Heathrow also announced new work towards a third runway, in a boost for the Chancellor Rachel Reeves who made her support for the controversial and much-delayed project a centrepiece of her crucial growth speech in January.
By its completion in 2008, the construction of Heathrow Terminal 5 had required 80,000 tonnes of steel, and estimates suggest construction of a third runway could require 400,000 tonnes.
Industry Minister Sarah Jones is expected to say at a launch event at Heathrow on Wednesday: “This investment is the latest in a long line of wins which our Plan for Change has helped deliver, and not only secures thousands of jobs but marks a major vote of confidence in our homegrown steel sector and this government’s Industrial Strategy.
“Driving demand for UK-made steel is a crucial part of our upcoming Steel Strategy, and by signing the Steel Charter Heathrow will give a huge boost to steelmaking communities across the UK and help us kickstart economic growth.”
Alex Veitch, director of policy at the British Chambers of Commerce, said the announcement would support “domestic steel production and supply chains across the UK”.
It is likely to be welcomed by the steel industry, which used a meeting with Jones on Tuesday to raise deep concerns about Trump’s proposed tariffs.
Tit-for-tat tariffs not ruled out
Whitehall sources have indicated the Government will not react to Trump’s tariffs until full details emerge, including on aluminum, given that there is still uncertainty over whether the President will introduce levies of 10 per cent or 25 per cent on the metal.
Trade Minister Douglas Alexander has suggested the UK does not want to fall into a trap of making concessions, due to the uncertainty created by Trump over the tariffs.
He told the Commons: “The new President has a speciality in generating uncertainty. It’s part of his style of negotiations to create uncertainty as to what will happen next.
“We need to take a considered view of what is emerging and still emerging in relation to aluminium”.
Alexander went on: “What British industry needs and deserves is not a knee-jerk reaction, but a cool and clearheaded sense of the UK’s national interest based on a full assessment of all the implications of the US actions.”
He added that the UK had a “strong and balanced trade relationship” with the US.
“We stand ready to work with President Trump to find solutions that work for both the United Kingdom and the United States,” he added.
While the Government is leaning away from hitting the US with retaliatory tariffs, it is still not ruling them out.
Alexander also declined to say whether the Government could swerve US tariffs on British steel by throwing the Chagos deal “in the dustbin”.
Sir Julian Lewis, the MP for New Forest East, asked: “If President Trump offered to cancel the tariff on steel imports in return for the UK throwing in the dustbin the appalling Chagos giveaway deal, would the Government agree?”
The minister replied: “Tempting though it is to indulge in the hypothetical negotiating strategy as ventriloquised through [Lewis], I think consistent with the approach that we need to take a considered view of what is emerging and still emerging in relation to aluminium, I think the responsible case is to say we should leave those in the good offices of the UK ambassador to the United States (Lord Mandelson) and the Foreign Secretary (David Lammy).”
A source familiar with the meeting said the tariffs would leave British steel at the mercy of indirect competition with China – notorious for “dumping” cheap steel – and risk the diversion into steel from all over the world into the UK market, bringing down the price.
The industry called on ministers to develop safeguards against dumping because the UK’s carbon border tax, which will raise the price of steel produced more cheaply by polluting countries, will not come into effect until 2027.
They also warned that the tariffs would have a negative impact on American jobs, while warning that a number of British producers had been counting on growth in exports to the US which now may not materialise.
Experts from the National Institute of Economic and Social Research said the tariffs would have a limited direct impact on the British steel industry but broader economic turbulence would hit the UK. However, they advised the Government not to hit back with levies on American steel which would raise prices for British businesses.
Ahmet Kaya said: “The total amount of steel exported from the UK to the United States is around £400m, which corresponds to approximately 6 or 7 per cent of total steel exports of the UK – which is, to be honest, not too high. But the direct effect may be lower for British manufacturing, but maybe because of the higher raw material prices globally, British businesses would be affected by those tariffs as well, indirectly.”
Stephen Millard added: “Big question, though, should we retaliate? My answer would be no. Why not? Because steel is an important input into production, you’re kind of almost kicking yourself by making imports of steel more expensive.”