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Sailors crossing the Atlantic in March are used to dealing with rough seas. But when two shipments of steel from Marcegaglia Stainless Sheffield were slowed up in crossing the ocean by storms this week it meant more than a few days’ extra journey: the metal was caught up in the global trade war started by the US president, Donald Trump, as well.
“Obviously, it’s a massive frustration,” says Liam Bates, the president of long products at the Italian steelmaker’s northern England operation. The company had hoped to rush through two weekly shipments in order to avoid the Wednesday deadline for Trump’s 25% tariffs on steel and aluminium. Instead, it will have to bear the costs – or hope for grace from the US government.
The tariffs have put the US’s trading partners, including the UK, in a tricky situation. They are being pulled in two directions: some want trade war retaliation, while others want “pragmatic” negotiation in the hope that the changeable Trump can be persuaded to ease the levies.
The EU’s response was swift. The bloc immediately retaliated with revived levies on all-American products such as bourbon whiskey, jeans and Harley-Davidson motorcycles, and the promise of more on an array of other products including makeup, chicken, beef and metals.
Yet the UK is taking the second path: keeping its head down, and hoping it can persuade the changeable and deal-driven Trump to change his mind.
Keir Starmer told parliament on Wednesday he was “disappointed”, while adding that the UK “will take a pragmatic approach” as it tries to negotiate a deal with the US. “But we will keep all options on the table,” he said, leaving open the possibility of future retaliation.
Chris Southworth, the UK secretary general for the International Chamber of Commerce, a business group, says the UK government will come under “tremendous pressure” to retaliate, and it may still do so. However, Starmer’s relative success in mollifying Trump may open the way to talks that could roll back tariffs for the UK.
“What they’ll be trying to do is avoid going head to head,” he says. The UK as a “pragmatic broker” could “try to shift the focus off tariffs, where neither of us win”. However, “it’s a tricky balance”, he adds.
It is not the first time that the Labour government has taken a relatively conciliatory stance on trade since it took power in July: it has also so far declined to impose tariffs on Chinese car imports, even as the US and EU have done so.
Carmakers with UK operations appear much more concerned to avoid retaliation from China – the world’s biggest car market – than on preventing Chinese products from coming into the UK. The Society of Motor Manufacturers and Traders has opposed the idea of tariffs on Chinese cars, and is not aware of any appeals from companies for investigation to the UK’s Trade Remedies Authority, the first step to imposing tariffs.
A source close to government negotiations said the UK was taking a different approach to the EU because “active and intense” trade negotiations could come up with something.
“Coming to an actual agreement is a better weapon in our arsenal,” the source said. However, if talks with the US fail, the government would definitely consider quotas or tariffs for the steel industry.
Hoping for a good result from talks may not satisfy businesses. One key effect is the possibility of trade diversion, when exporters try to find new markets when their originals are closed. The steel industry shared its concerns with the business and trade secretary, Jonathan Reynolds, on Wednesday.
Gareth Stace, the director general of UK Steel, a lobby group, argues that the government should act quickly to prevent trade diversion, to match the speed of the EU, which is set to tighten protections within days.
“The need for quickness doesn’t seem to have landed enough,” Stace says, referring to protections against other countries dumping steel in the UK once the US market is closed. He says the UK should “rip up the rulebook and get on with” protecting the sector.
However, Stace strongly praised the government’s efforts to persuade the US: “We’re your friend, not your foe.”
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The UK is a relative minnow in the global metals industry, with 4m tonnes of steel produced in 2024 against more than 120m from the EU, or 1bn from China. That disparity means that the UK, no longer part of the EU, is not likely to be an economic priority for Trump – although there is a chance it could help the UK to win concessions.
The Indian-owned Tata Steel, which runs the vast Port Talbot steelworks in south Wales, has great influence with the UK government because it will once again become the country’s largest steel producer when it replaces its now-shut blast furnaces with electric arc furnaces. A spokesperson said that the UK must add safeguard measures to “avoid cheaper imports flooding our market and pushing down prices as competitors look to redirect steel originally destined for the US”.
Another steel industry executive, whose business exports about 10% of its products to the US, says Trump’s argument for restrictions on the vast supply from China in particular was “something that I don’t totally disagree with”. He argued that “trade remedies to protect our own industry” would help to avoid undercutting by Chinese steelmakers, which are desperate to find buyers amid weak domestic demand.
Yet not everybody is a fan of immediately moving to protectionism – not least because it could reduce export opportunities if everyone starts to pull up the drawbridge.
Bates said he believes the same is true of UK retaliation against the US that could inflame the situation and lead to tit-for-tat tariffs that could block export markets completely.
“At the moment it feels like a better way to see if a deal could be done,” he said.
The irony of Trump’s tariffs for Marcegaglia is that it will make things more difficult for its US operations in South Carolina, where 65 employees roll steel shapes known as billets and blooms into products for cars, construction and the oil industry.
Trump’s argument when faced by global stock market turmoil in recent days is that there will be a “period of transition” – and maybe even a recession – while businesses are forced to shift manufacturing to the US, “reshoring” jobs to the US. However, that is not an option for Marcegaglia because it does not have a “critical mass” in the US to justify the investment in another melt shop.
“It’s quite extraordinary how anyone thinks this will do anything other than damage the US,” says the ICC’s Southworth. “It’s hard to think that anyone is looking at the US as a reliable partner.”
