The Wrong Way to Rescue British Steel

In an attempt to prop up Britain’s steelmaking industry, the Government has sharply restricted tariff-free steel imports and placed British Steel under extraordinary state direction, while leaving it formally owned by China’s Jingye Group. As someone who has worked on steel policy in government, I have a great deal of sympathy for the industry and its highly skilled workers.

Successive governments have failed to come up with a plan to support the industry in the face of a vast and growing glut of cheap steel, much of it originating in or routed through China, which is steadily undermining the viability of market-based producers. The OECD now estimates global steelmaking overcapacity at around 640 million tonnes, rising towards 745 million tonnes by 2028, with Chinese exports hitting a record 131 million tonnes in 2025 — more than the European Union’s entire annual output.^[1]

However, the Government’s approach is again the wrong one. The measures risk provoking retaliatory trade barriers against British exports, will raise costs for steel-using businesses, and have prompted warnings from the construction industry about shortages, longer lead times and delays to housebuilding. The intervention had cost taxpayers £377 million by the end of January and was expected to exceed £642 million by June — around £1.4 million a day. The National Audit Office has warned that the bill could exceed £1.5 billion by 2028 if current spending continues, even before transformation, compensation or exit costs are included.^[2]

The current approach is not fair to businesses or taxpayers. It is bad for the UK’s growth prospects and will not, by itself, secure a sustainable future for British Steel. Here are three things the Government should do instead.

1Target the dumping, not every import

Rather than tariffs and other blunt protectionist measures, the Government should deploy targeted trade remedies. This would avoid penalising countries that play by the rules, ensure there is still plenty of imported steel for firms to buy, and tackle the real culprit: China.

The Trade Remedies Authority (TRA) already runs evidence-based investigations into specific Chinese products sold below their normal value, and applies duties only to those products — and often only to specific exporting companies (corrosion-resistant steel and heavy steel plate from China are both currently subject to such measures, reviewed periodically to check they remain justified).^[3] This is a more surgical instrument than a quota-and-tariff regime: it punishes proven dumping rather than penalising all imports regardless of origin or pricing behaviour, and because the duties are calculated against actual price evidence, they are both fairer and harder for trading partners to dismiss as protectionism.

The TRA’s powers should be used more assertively where the evidence supports it, particularly through anti-circumvention investigations. When a measure on Chinese steel succeeds, production sometimes shifts to a country with weaker scrutiny, where only minimal processing is performed before the goods are re-exported to the UK. Strengthening the UK’s capacity to trace this kind of transhipment closes a loophole that blanket tariffs do not, since a flat tariff applied to all countries can still be undermined by mislabelling and altered country-of-origin paperwork.

Punish proven dumping, not every import regardless of origin. That is fairer — and far harder to dismiss as protectionism.

2Make it a coordinated effort

It is also worth remembering that the UK is a comparatively small player in a problem that is fundamentally global. The Global Forum on Steel Excess Capacity and the OECD’s Steel Committee bring together dozens of governments to pressure China and other major producers to reduce subsidies and capacity rather than simply exporting the problem elsewhere; the OECD has set a goal of agreeing a joint policy framework by mid-2026.^[4]

Unilateral UK tariffs will always be partially circumvented as trade reroutes through third markets. Coordinated pressure from the UK, EU, US and other major steel-consuming economies — on issues such as subsidy disclosure, capacity-data transparency and joint trade-remedy enforcement — would make it far harder for Beijing to simply route around them. Having attended the OECD Steel Committee’s sessions myself, I can attest that there is an appetite for this among officials in the EU and likeminded countries; the issue is a lack of political will. If, as expected, Andy Burnham enters Number 10 on 20 July, he should ensure that his Foreign and Business Secretaries make this a priority.

3Fix the price of energy

Most importantly, the Government must tackle industrial electricity prices. In 2024, Britain had the highest industrial electricity prices among the countries covered by the IEA’s comparison, with prices for large users more than twice the EU-14-plus-UK median.^[5] The gap reflects gas-linked wholesale pricing, network charges and exceptionally high policy costs. It means British Steel has been unable to compete with France or Germany, let alone China — and it is the one area where the Government can act domestically without risking offending or alienating other countries.

The main reason British businesses face such high energy costs relative to their competitors is a toxic combination of taxes and regulations on carbon-emitting energy sources, coupled with a failure to increase the supply of reliable energy. Andy Burnham should therefore commit to slowing the rush towards Net Zero in order to ease the burden on the steel industry, while pushing through reforms to the planning system to make it easier — and cheaper — to build new nuclear power plants.

A future worth securing

Britain’s steel industry is in crisis, but it can still have a viable future. Unfortunately, the Government’s current approach is unfair to taxpayers and other sectors, is not financially sustainable, and will not on its own secure the industry’s future. Instead, it should use targeted trade remedies and work with the EU and likeminded countries to confront China’s unfair trade practices, while lowering energy costs at home.