This article is more than 2 years old

This article is more than 2 years old

The escalating trade war started by Donald Trump could mean fresh financial woes for Britain’s biggest steel plant, less than 18 months after workers agreed to pension benefit cuts to save the Port Talbot works.

From 1 June, the US president imposed a 25% tax on steel and a 10% tax on aluminium from the EU, Mexico and Canada. On Friday Trump upped the ante, announcing a 25% tariff on $50bn (£38bn) of Chinese goods. All countries targeted by US tariffs have vowed to take retaliatory measures.

The Port Talbot site has 4,200 employees and sells about 10%-12% of its output to the US.

US on brink of trade war with EU, Canada and Mexico as tit-for-tat tariffs begin Read more

Alan Coombs, a Community union shop steward at the site, said the workforce had become even more concerned about the grim prognosis for the future of steelmaking in this country.

He added: “It’s hard to lift your head and look towards the future sometimes. There was a lot of uncertainty anyway, and this just adds more. It puts a doubt in everyone’s mind about the future.

“It’s pretty simplistic to say things like ‘we’ll just add 25% to the price’ because there’s a lot of cheap competition out there. It’s ironic because we started looking into the US market a lot more when the Chinese were dumping their steel here.”

The Port Talbot plant has been battered by job cuts and was threatened with closure in the 2016 steel crisis, prompted by weak demand and a glut of cheap Chinese output.

Its future was only secured after workers agreed to cuts to their pension benefits in February 2017, part of a package of proposals to help turn the business around.

Even with these measures, Port Talbot’s Indian owner, Tata, decided the only long term option was to seek out a joint venture with ThyssenKrupp, a German rival, to pool European assets. That deal is on course to be concluded imminently.

However, Britain’s steel sector has barely had time to haul itself off the canvas before being hit with another dizzying blow.



The UK exports 350,000 tonnes of steel to the US a year, about 7% of the country’s annual production.

Most of this is high value and speciality steel, with an average price of €1,400 (£1,200) a tonne. The average price for hot-rolled coil steel, one of the benchmark types of steel, is about €600 a tonne.

The US tariffs apply to a wide range of steel and aluminium products such as sheets, plates, bars, pipes and “semi-finished” products. Trump wants to protect US steelmakers by making it more expensive for the county’s manufacturers to buy foreign steel.

UK Steel has warned that Trump’s tariffs would leave about 20m tonnes of Chinese steel needing to “find a new home to go to”.

Coombs said: “The big concern is that it will encourage China to start dumping steel on our doorstep again. The last time we saw stuff like that we went down to one blast furnace. So, it’s a worry, of course.”

The Welsh steelworker said it was too soon for the trade charges to have made an impact, but added: “The fear among the guys is that it’s just around the corner. Everyone in Port Talbot is very aware of how serious this could be.”

US on brink of trade war with EU, Canada and Mexico as tit-for-tat tariffs begin Read more

The GMB union this month said the parliamentary constituency of Aberavon, home to the Port Talbot site, was “most at risk” from Trump’s tariffs.

The union outlined the importance of the industry to Britain, saying it supports more than 34,000 jobs, with annual wages of more than £1bn, and £230m paid in tax and national insurance contributions.

Stephen Kinnock, the Labour MP for Aberavon, said the Port Talbot works was the “beating heart of the community”.

He added: “The tariffs are potentially a hammer blow. But the community and the workforce is resilient.

“It’s been met with a big shrug as if to say ‘people continue to let us down and not stand up for steel’. The people of Port Talbot just put their heads down and keep going.

“The works is in a better position than it was a few years ago, but it is still very fragile and very precarious. Even though the economic outlook is improving, people are just about keeping their heads above water.”

As well as the threat of trade barriers and cutthroat competition, British steelmakers must also deal with the burden of higher production costs than many of their competitors around the world and Europe.

Steel-making is an energy-intensive process and the UK has some of the highest power bills in Europe. They also face higher labour costs and tougher environmental restrictions than global competitors.

The George W Bush administration introduced steel tariffs in 2002, which lasted for 20 months.

It prompted threats of retaliation from the European Union on US products before the policy was abandoned.

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The EU, like China, will challenge the US steel tariffs at the World Trade Organization and the policy is likely to result in tit-for-tat charges on American-made goods flowing into Europe.

For Port Talbot, Trump’s tariffs are just another hurdle for long-suffering bosses and workforce to overcome.

“It’s frustrating - something like this, which is out of your control,” said Coombs. “You start to think what else may be around the corner?”

