As the 1 July implementation date for the Government planned steel tariffs and quotas approaches evidence from across the sector is raising concerns that the combined impact of the planned tariffs and quotas—compounded by ongoing cost pressures from the Iran conflict—presents severe and immediate risks to the UK construction industry. Therefore CLC is working to inform the Government of the key impacts and make proposals to address the issues.
The key impacts crystallising include:
- Commercial impact: Structural steel prices have risen sharply. Market volatility has significantly increased, reducing the ability to forecast costs accurately and increasing commercial risk on lump-sum contracts.
- Project viability: Evidence from the sector indicates that the proposed measures are already affecting scheme viability, with cost increases of 14–18% being reported on live projects and per-unit cost increases of up to £4,000 on residential developments which will further impact on the Government’s house building target.
- Supply impact: The quota system creates significant risk of supply shortages for steel grades and section sizes where domestic mills are either at full capacity or do not manufacture the required products.
- Critical issues for fabrication manufacturers: While the steel strategy is primarily intended to benefit the main producers, there are serious unintended consequences likely for the UK’s fabricated steel sector which employs approximately 60,000 in the UK. The fabricated sector estimates job losses of potentially 30,000 over the next 5-7 years should the tariffs and quotas be implemented as currently envisaged.
- Lead time impact: Uncertainty around quota availability has already triggered “panic buying” behaviour, increasing short-term demand and extending procurement lead times. This volatility makes programme certainty increasingly difficult for contractors and clients.
- Carbon impact: High tariffs on imported low-carbon steel may unintentionally force projects to procure more carbon-intensive domestic alternatives, with the potential to undermine project sustainability targets and embodied carbon reduction strategies.
Over the past two months and ongoing, we have been convening a CLC Industry Working Group on Steel Tariffs and Quotas to understand the impacts on UK construction of this trade measure. The work of this group has included input and feedback from a cross section of the industry affected by this including major manufacturers and suppliers, contractors and developers and related trade associations. The work of this group has been utilised to engage at ministerial level to raise these concerns. Further this group has engaged in online discussions and provided briefing notes to members of the DBT steel and construction teams to provide detail on the issues to assist their work.
Core to the recommendations being made has been to emphasise that CLC continues to welcome the Governments long-term commitment to supporting the steelmaking industry, however, that a balanced approach is necessary that safeguards the future of UK steelmaking (both (British-made and British-fabricated steel) and without unintentionally undermining the construction sector that depends on it. As part of this industry proposals have been put forward to address the issues being raised, these are:
- It is recommended that fabricated and semi-finished steelwork should be included within the steel tariff and quotas framework from 01 July 2026.
- Product categorisation should be re-considered, recognising UK manufacturing capability and capacity to prevent unnecessary price rises on products not produced here.
- The schedule for the Government’s review of the tariffs and quotas should be brought forward from 12 months to 6 months to address the concern that impact of the tariffs and quotas will be felt much sooner and more severely by UK businesses than Government originally anticipated.
The CLC continues to work with Ministers and the Department for Business and Trade to highlight these concerns and seek solutions. We will keep you updated with progress.
