An employee cuts a sample from a roll of coiled steel at Liberty House Group’s mill in Newport, south Wales. (Getty Images)

The UK steel industry is bracing for an immediate slump in trade as government talks between London and Washington aimed at removing Trump-era tariffs on British steel and aluminum failed.

In the meantime, the US and the EU reached a Halloween agreement to remove tariffs on a quota of steel and aluminum imported from the bloc into the United States from 1 January.

So, while the tariffs remain on UK exports to the US, Britain’s EU rivals will gain a 25% price advantage selling to the giant US market.

British exports to the bloc could also be hit due to an unusually strict clause in the EU-US agreement that means steel originating in the UK will still attract the tariffs even if worked on and exported by EU companies.

Earlier this month, British Trade Secretary Anne-Marie Trevelyan invited the US commerce secretary for further discussions in London, which were reportedly scheduled for January. However, an industry source said they were not optimistic that a deal would be reached quickly.

Trevelyan said in a statement then that it is the time to hit the ground running and get on with boosting ties with our closest ally.

However, despite a trade deal with the US that Prime Minister Boris Johnson touted as one of the biggest benefits of Britain’s exit from the EU in the years following the 2016 Brexit vote, US President Joe Biden has since made clear that any such deal is not a priority for his administration.

The US tariffs were first introduced by former president Donald Trump in 2018 under section 232 of the Trade Expansion Act on national security grounds. Imports supposedly undermined the US’s ability to produce its own steel.

Gareth Stace, the director-general of UK Steel, said, UK steel exports to the US have halved since President Trump introduced steel tariffs in 2018. There can be no doubt these measures have significantly harmed the UK’s interests in its second biggest steel export market.

Whilst we welcome the move by the US to start easing its tariffs, without a UK deal in very quick succession, our export position will only deteriorate further. It is essential that the government strains every sinew to secure a deal and ensure that UK steelmakers are able to sell their steel into the United States.

The British government must explain why the EU had a deal but the UK did not, said Harish Patel, the national officer for steel at Unite, a trade union representing many British steelworkers.

The new development comes amid reports that the US was holding back over the UK’s threats to unilaterally change post-Brexit trading rules governing Northern Ireland.

London negotiated the so-called Northern Ireland protocol a year ago as part of the Brexit trade deal with the bloc, but it has repeatedly said it may unilaterally break it off. Biden has warned Johnson against threatening peace on the island of Ireland.

Patel said, It is alarming that British-produced steel is being effectively locked out of the critical steel market, as the continuing tariffs make EU steel considerably cheaper.

The government has to sort this matter out quickly. Unless the tariffs are speedily lifted, hundreds of jobs in the steel and associated industries, most of them in so-called red wall seats, are at risk.