Starmer Says US Not Targeting Steel Ownership in Trade Talks

Article content

(Bloomberg) — The UK does not need to push out British Steel’s Chinese owners in order to cut a deal to reduce US tariffs on steel, Prime Minister Keir Starmer said.

Article content

Speaking to journalists at the G7 summit in Canada, Starmer said there was “further work to do in relation to steel” in negotiations with President Donald Trump but that “doesn’t require us to change the ownership of British Steel.”

Article content

Article content

It comes a day after Starmer and Trump announced they had finalized the details of a trade deal that will allow the UK to avoid the higher tariffs that the US is imposing on other countries. Its main terms — initially agreed to in May — gave the US greater access to the UK’s beef and ethanol market in return for lower tariffs on UK steel and automobiles exported to the US.

Article content

Article content

But while the two leaders on Monday agreed to implement a reduction in tariffs on UK cars from 27.5% to 10%, an exemption for Britain’s civil aerospace sector from Trump’s baseline 10% tariff, and for increased access to US beef and ethanol exporters, steel was left off the list.

Article content

Article content

The US has demanded that the UK meet its “requirements on the security of the supply chains of steel and aluminum” including on the “nature of ownership” of relevant steel plants — provisions that were included in the original May agreement and the one struck this week. That had prompted speculation that the ownership of British Steel by China’s Jingye Group was problematic — even though the government took operational control of struggling British Steel earlier this year.

Article content

But Starmer dismissed that suggestion on Tuesday. 

Article content

“There’s further work to do in relation to steel, but we’re getting on and doing that work, and that doesn’t require us to change the ownership of British Steel,” Starmer told reporters in Kananaskis, Canada on Tuesday. He added that in the meantime, the tariff reductions for cars and aerospace will be implemented “within days.”

Article content

Article content

Last week, UK Business and Trade Secretary Jonathan Reynolds told reporters in London that the real hurdle was so-called “melt-and-pour” provisions. They’ve been a feature of previous trade deals with the US and demand that steel must be melted down and poured in the UK to benefit from preferential tariff rates. 

Article content

That’s a requirement that is becoming increasingly hard for UK steel manufacturers to fulfill. British Steel owns the country’s last remaining blast furnace. Tata Steel shut its down last year, and a new electric arc furnace that can create steel from scrap will not be up and running until late 2027.

Article content

“One has to remember that while the Biden administration also insisted on conditions to have steel melted and poured in exporting countries, there were also product-specific exemptions which the UK benefited from given its niche orders from US customers,” said Allie Renison, director at SEC Newgate and a former adviser to the previous government’s business and trade secretary. “In reintroducing steel tariffs, the Trump administration scrapped these so that duties also extended to derivative products, and trying to negotiate back to these or asking for an exclusion will naturally take some time.”