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(Bloomberg) — The United States’s offer to cut steel tariffs on the United Kingdom will only come into effect once the UK has met requirements relating to the ownership of certain plants, a condition that raises further doubts about the Chinese firm Jingye Group’s possession of British Steel.
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According to the text of the US-UK economic prosperity deal that was announced by President Donald Trump and Prime Minister Keir Starmer on Thursday, the US will offer an import quota on UK steel at reduced tariff rates once the United Kingdom meets unspecified requirements on supply-chain security and “the nature of ownership of relevant production facilities”.
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The caveat indicates how Trump may seek to leverage his trade negotiations with other nations to challenge China’s economic influence. Britain took de-facto control of British Steel last month in order to prevent the closure of two blast furnaces, but the loss-making company is still owned by China’s Jingye.
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The text of the agreement says the US will “promptly” construct a quota for steel imports from the UK, provided it is satisfied that its conditions are met. The size of the quota and timeline for its implementation are still unknown.
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Eliminating the US’s 25% tariffs on steel was one of Starmer’s key objectives going into the negotiations with Trump’s administration. Britain’s steel industry was already struggling before the tariffs, due to pressure from high energy costs and the competitive threat of cheaper Chinese imports.
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The UK exports around 200,000 metric tons of steel per year to the US, worth over £400 million ($532 million), according to UK Steel. The lobbying group has called the levies a “devastating blow” to the sector.
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The UK has said that a nationalization of British Steel remains the most likely outcome in the near-term, though its preference is to find a private partner with which it could co-invest.
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Starmer’s government has been reticent to act due to the high cost of nationalization: British Steel has said it makes losses of £700,000 a day operating its blast furnaces, and the company made a pretax loss of £231 million in 2023 while having £735 million in outstanding debts.
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The US Commerce Department and the UK’s Department for Business and Trade did not immediately respond to a request for comment. A spokesperson for British Steel said the company is studying the text of the deal and was not immediately able to comment.
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—With assistance from Lucy White, Jack Ryan and Catherine Lucey.
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