US steel customers ‘spooked’ by ‘tariff warfare’, Tata Steel says

US tariffs on imported steel and aluminium have “spooked” customers of British steel, according to Tata Steel UK.

Chief executive Rajesh Nair told MPs some American customers were seeking other suppliers to avoid “tariff warfare”.

Tata Steel operates the UK’s largest steelworks in Port Talbot and exports around $100m (£77m) of steel annually to the USA.

The company told the business and trade committee there was also a “significant impact” from cheaper steel from around the world being diverted to the UK because of the US tariffs.

On 12 March the USA imposed 25% tariffs, or import taxes, on steel and aluminium products arriving in the USA.

Tata Steel’s exports from the UK to America are packaging steels and tubular products for oil and gas industries, according to Mr Nair.

“The customers are spooked, the customers are wanting to go to other suppliers to make sure they don’t get caught in the tariff warfare,” he said.

Mr Nair was giving evidence to the committee’s inquiry into the UK government’s forthcoming industrial strategy.

He said existing customers had contacted the company to cancel orders, and in other cases were asking for “compensation” from Tata Steel towards the cost of the tariffs, which must be paid by the importer in the USA.

In response to the US tariffs the European Union imposed a raft of retaliatory measures on American goods being exported to the EU.

But the UK has resisted retaliating directly, with the Westminster government continuing to push for a wide-ranging trade deal with the Trump administration.

Asked if the UK should retaliate with its own tariffs, Rajesh Nair called instead for greater protection for UK steelmakers from foreign imports.

“We have got to act in a manner and a way in which we protect and safeguard the industry in a way in which the incumbent players can continue to do business, and the customer gets a fair deal at the end of it all.

“It has to be some short-term measures to protect what we have in the country, rather than some retaliatory measures,” he said.

Steelmakers’ union Community, which also appeared before the committee on Tuesday, said it was concerned about the impact of tariffs and diverted steel on the UK workforce.

“We are worried about what this means for jobs and for the sustainability of the industry,” said Alasdair McDiarmid, assistant general secretary of Community.

He said tariffs were “a terrible idea, it is a terrible idea for the US just as much as it is for us”.

Asked if workers were angered by the change in trade policy, Mr McDiarmid said: “Yes they are angry, of course they are angry.

“They are worried about their livelihoods, and the future of their plant and their communities as well. It is not a situation they would choose to be in.”

He said the “biggest concern” for the union was the diversion of steel from the US market to the UK, and said Britain must move “extremely quickly and decisively” to strengthen trade defences.

The UK government’s business and trade secretary Jonthan Reynolds has previously said that he wanted to pursue “pragmatic and positive engagement” with President Trump’s administration “to agree a wider economic deal in both our interests”.