A decision to double tariffs on steel imports and halve quotas within weeks will severely disrupt manufacturers’ supply chains and “decimate” vehicle orders, according to trailer builders.
The government said it was introducing new trade measures to protect UK steel production with a massive 60% cut in quota levels for imports and a simultaneous 50% tariff on steel imports above these levels.
Outlining the government’s plan, due to kick in on 1 July, business secretary Peter Kyle said: “A stable, thriving steel sector will provide a secure supply of high-quality steel to downstream customers.
“The tariff will apply only once import quotas have been met, which will facilitate continued imports for industries that rely on them, including those in the automotive, construction and defence sectors.”
However, manufacturers have told Motor Transport that the scale of the changes is already causing disruption, with the UK steel industry not in a position to replace imports and suppliers already reluctant to commit to forward pricing.
Paul Bratton, group president at SDC Trailers, said: “We don’t have enough foundries at all, everyone is clambering for steel.
“There’s not enough capacity in the EU to supply us and along with diesel prices this will decimate people’s order books and lead to cancellations.
“This was ill-thought-out for British industry.”
Richard Owens, marketing manager at Don-Bur, said the cost increases were not absorbable and would be reflected through the supply chain.
“The practical effect is that manufacturers will be pushed toward UK-produced steel to avoid tariffs,” he said.
“However, with limited domestic capacity, this creates a captive market where prices are expected to rise towards import parity – just below the tariff-adjusted import price.
“In effect, this resets the price of steel across the UK market, rather than simply increasing the cost of imports.”
Don-Bur MD David Burton added that most customers were unaware of the impending changes, but it would inevitably have an impact on trailer pricing:
“The first thing we have got to find out is the level of the increase. If it’s a significant change in the price per tonne then we couldn’t absorb those sort of increases.
“There would be no alternative but to increase our prices. I don’t think we have a choice, it’s something that is out of our control.”
The Confederation of British Metalforming (CBM) said that when the new quotas were announced, the UK mill immediately increased its prices by over £100 per tonne on some steel grades.
Stephen Morley, CBM president, said the contraction in tariff rate quotas “risks creating an immediate supply gap, which domestic production is unlikely to fill in the short to medium-term.
“I’ve had several Tier 1 automotive suppliers already contact me directly on this, who are worried about supplying OEMs,” he added.
