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Tuesday, Jul 01, 2025

US-UK Trade Agreement Places Conditions on British Steel Ownership

US-UK Trade Agreement Places Conditions on British Steel Ownership

New deal aims to restrict Chinese influence over UK steel industry and address tariffs on car exports.
The recent US-UK trade agreement introduces specific conditions regarding the ownership of British steel plants, primarily targeting the Chinese-owned British Steel plant in Scunthorpe.

The deal, emerging from negotiations to mitigate existing steel tariffs, aims to prevent potential circumvention of US tariffs by ensuring that Chinese interests do not manipulate UK operations for benefits in the American market.

Reports indicate that the US administration, under former President Donald Trump, insisted on these ownership conditions to secure its position against Chinese competition.

Government officials in the UK have stated that control of the Scunthorpe plant is effectively in the hands of Jonathan Reynolds, the UK’s Business Secretary, reducing concerns that the plant could be used as a processing base for Chinese steel.

The trade deal, finalized recently, delivers significant relief to both the car manufacturing and steel industries amid concerns over potential job losses.

Under the agreement, US tariffs on cars are set to be reduced to 10%, while steel tariffs could be eliminated entirely, contingent on fulfilling stipulated conditions.

This development marks a notable win for sectors worried about the ramifications of trade tariffs.

Peter Mandelson, the UK’s ambassador to the US, highlighted the immediate impact of the deal in preserving jobs at the Jaguar Land Rover (JLR) plant in the West Midlands, averting potential cuts affecting a significant portion of its UK workforce, which numbers around 30,000.

Reports previously indicated that JLR was preparing for layoffs prior to the deal, pending resolution of tariff negotiations.

Leader of the Opposition, Keir Starmer, expressed optimism about the agreement, asserting that its effects would safeguard numerous jobs across the steel, automotive, and pharmaceutical sectors.

Discussions between the UK and US continue over the precise definitions and parameters of the steel export quotas that will qualify for tariff-free treatment.

These negotiations emphasize the necessity to evaluate supply chain security and the ownership of production facilities, which are critical components outlined in the agreement text.

The US plans to establish a quota for UK steel and aluminum once certain requirements are met.

Howard Lutnick, the US Secretary of Commerce, reaffirmed that the UK government’s actions regarding the nationalization of British Steel were pivotal to the deal, although UK officials clarified that US pressure was not responsible for this move.

The UK currently exports approximately 200,000 metric tons of steel to the US annually, valued at around £400 million.

Chrysa Glystra, director of trade and economic policy at UK Steel, acknowledged the complexities that lie ahead, stating that clarity on the terms of the tariff exemptions and operational deadlines is essential for the steel sector.

The urgency of the recent agreement reflects an attempt to secure immediate progress and safeguard jobs within the UK automotive industry.

While discussions with US officials continue to refine the deal, former President Trump has pivoted his focus towards upcoming trade talks with China, suggesting that the finalization of the specific elements of the UK agreement is expected in the coming weeks.

Despite speculation, No 10 has dismissed claims that the deal grants the US a veto over Chinese investments in sectors impacted by the agreement.
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