The UK government has given its strongest signal yet that it will seek exemptions from tariffs being threatened on British steel entering the US.
US President Donald Trump has announced 25% taxes on steel entering the country, meaning American businesses face having to pay more to import the metal.
But Business Secretary Jonathan Reynolds told the BBC that the UK had a strong case to avoid the border taxes, given the amounts Britain exported to the US were small in comparison to other countries and because the steel was used in areas such as defence.
Trump has previously said the tariffs will be enforced on 12 March “without exceptions or exemptions”.
The government has said it would not retaliate immediately to new measures announced this week, despite many in the steel industry calling on Britain to join the European Union and Canada who have said they will hit back against the policy.
The UK is not a big supplier of steel to the US, with the country accounting for about 10% of British steel exports. However, for some suppliers of specialist products, trade with the US is much more important.
There are also concerns within the industry that the tariffs might not only hinder exports to the US, but could also lead to excess steel being “dumped” in the UK.
This could occur if other countries no longer exporting to the US decide to offload steel at cheaper prices, which could potentially lead to UK steelmaking businesses being undercut.
Reynolds acknowledged there was a global oversupply of steel and aluminium but said he would argue to the Trump administration that the UK was not the problem.
His comments also suggested that the UK would be reluctant to join potential retaliation by the EU to any further tariffs imposed by the US, adding that “the UK national interest was best served by free trade”.
Tariffs are paid by companies importing goods from overseas, not by the foreign companies selling the products.
There are concerns that the measures could lead to a rise in inflation if the company buying the goods passes on the cost of the tariff by charging their customers more.
In some cases, the company could decide to absorb the costs themselves, or simply to reduce imports, which would hit foreign exporters – and in the UK’s case, British steelmakers exporting to the US.
Earlier this week, Prime Minister Sir Keir Starmer’s spokesperson declined to say whether Trump was wrong to impose the tariffs.
The threat of trade tariffs has been noted to have created uncertainty for UK businesses, which are set to be hit by higher taxes from April.
Reynolds conceded that tax rises on businesses announced in Budget had been “challenging” for firms of whom the government was “asking a lot”.
Appearing before a gathering of business leaders near Kings Cross, Reynolds announced new guidance for the competition watchdog to be more agile, speedy, and less risk averse.
The meeting came after the chair of the Competition and Markets Authority [CMA] was recently forced out by ministers over concerns it had not been sufficiently focused on economic growth.
The business secretary hinted the government could take further action to reduce the regulatory burden on businesses.
“I think we have to genuinely ask ourselves, have we got the right number of regulators?” Reynolds said.