UK steel producers will have to pay a 25% tariff to sell certain construction products in Northern Ireland after EU quotas for global imports ran out earlier than expected.
Steel producers and shareholders were told of the new tariff on Wednesday in a notice from HM Revenue & Customs, prompting a fierce reaction from the industry.
“It is beyond farce that UK producers are now being prevented by these tariffs from selling goods to customers in their own country,” said Gareth Stace, managing director of UK Steel, the trade association of the industry.
“To add insult to injury, EU steel producers can continue to export these goods duty free throughout the UK, but we can no longer do it in the opposite direction,” he added.
UK Steel has called on the government to suspend tariffs immediately.
The prospect of British companies paying tariffs to send steel into the UK’s internal market is extremely politically sensitive and risks further angering the unionist community in the region, which has rejected the protocol because that it divides the United Kingdom.
The two candidates to replace Boris Johnson as prime minister next month have pledged to pass legislation that will give UK ministers the power to unilaterally rewrite the protocol they have declared ‘unenforceable’.
Brussels has warned that if the UK goes ahead with the legislation, it will breach its commitments under the international treaty and risk the possible suspension of the entire EU-UK trade cooperation agreement.
Under the agreement governing post-Brexit trade deals for Northern Ireland, all goods from Britain must pay EU tariffs if they are likely to pass through the Republic of Ireland and the EU single market.
When the Northern Ireland Protocol came into force in early 2021, a temporary workaround was established which gave UK businesses a specific quota to export to the province duty-free.
This changed in July following a decision in Brussels to consolidate individual national quotas. This opened up Britain’s share to other countries that were quicker to use up the global quota, UK Steel said.
“Countries like Turkey are using up a lot of the quota and there’s none left for anyone else,” said Richard Warren, UK Steel’s head of policy.
The European Commission, in its decision on steel tariff quotas, said it had consciously rejected the idea of creating special arrangements for the UK in light of the “historic trade” between Britain and Northern Ireland.
Sam Lowe, trade expert at consultancy Flint Global, wrote that the embittered political relationship between London and Brussels over the Northern Ireland protocol had exacerbated the commission’s refusal to make exceptions for the UK.
“It’s something that could be solved quite easily if the EU-UK relationship was in a better place. But it’s not,” he wrote on his blog of the most popular nation. favored on commercial business at the beginning of the month.
The overall quota is renewed quarterly, but the abolition of the UK’s specific allocation meant UK producers risked facing tariffs again in the fall, Warren said. UK steel companies fear this will encourage customers to switch to EU suppliers to avoid price uncertainty.
Neither the UK government nor the European Commission would comment.