UK government publishes new steel strategy and announces significant trade measures on steel imports

From 1 July 2026, the UK's quota levels for steel imports will be cut by 60% from current levels, with any excess facing a 50% tariff. This measure and other announcements in the Government's new Steel Strategy have significant implications for all stakeholders in the UK steel sector.

Overview

On 19 March 2026, the UK Government published its long-awaited Steel Strategy which includes a significant new steel trade measure, alongside a landmark package of state support for UK steel. The Steel Strategy aims to strengthen economic, energy and national security, while also promoting industries including clean energy, construction and defence.

The Steel Strategy is published at a moment of acute pressure on the UK's domestic steelmaking industry. Crude steel production has declined by more than 50% over the past decade and global overcapacity has reduced the competitiveness of UK producers. Without action, critical supply chains are exposed to dependence on overseas suppliers at a time of significant supply chain disruption and geopolitical volatility.

Reduced Import Quotas and Increased Tariffs

With effect from 1 July 2026, the Government will reduce quotas for steel imports by 60% compared to current arrangements and impose a 50% tariff on steel imports above those quota levels. The scope is limited to steel products which can be made domestically.

The current regime, providing for a 25% above-quota tariff, expires on 30 June 2026. The new regime will take effect immediately upon its expiry and will be reviewed after twelve months.

For businesses sourcing steel internationally, above-quota imports may become prohibitively expensive under most procurement models. Businesses reliant on non-domestic steel supply, whether directly or through their supply chains, should be assessing their exposure now and considering whether domestic sourcing arrangements are viable.

Transitional Period

The Government is exploring a transitional arrangement under which the new 50% tariff would not apply to goods under contracts agreed before 14 March 2026 and imported between 1 July and 30 September 2026. These details are still being finalised.

What Else is in the Steel Strategy?

Alongside tariffs, the main mechanisms for increasing UK steel demand met by domestic producers include the following:

• £2.5 Billion Investment from the National Wealth Fund: The UK's National Wealth Fund will provide up to £2.5 billion of investment this Parliament, as well as a further £500 million towards Tata Steel's £1.25 billion transformation at Port Talbot. Peter Kyle, Secretary of State for Business and Trade, has said that the UK is "welcoming investment from new entrants to the UK market. The National Wealth Fund is there to support them".
• Inclusion of UK Steel Manufacturers in Offshore Wind Developers' Clean Industry Bonus Applications: On the demand side, the Steel Strategy permits offshore wind developers to include UK steel manufacturers in Clean Industry Bonus applications, from Allocation Round 8 (opening July 2026). The policy is designed to enable UK steelmakers to participate in offshore wind supply chains at scale.
• Support for Electric Arc Furnaces (EAFs): A recent review confirmed EAFs as the most viable decarbonised form of steel production. EAFs use recycled scrap steel and produce significantly lower emissions, aligning domestic steelmaking with net zero commitments. EAFs are heavily dependent on electricity, and the Government is actively engaged in reducing electricity prices for Energy Intensive Industries (EIIs). Policies including the British Industry Supercharger and the EII Compensation Scheme have collectively reduced electricity prices for steel producers on average from £168/MWh to £86/MWh, cutting production costs for EAFs by approximately £40 per tonne of crude steel. This has brought EAF costs in the UK to a broadly comparable level with EU competitors.

Global Context

The measures are responding to global trends in steel production. The OECD estimates that excess steel production will reach 721 million tonnes by 2027, with China accounting for over 50% of global crude steel output. When other major economies restrict access to their markets, as the US, India, South Africa and the EU did in 2025, surplus steel is directed towards those which remain open. As a net steel importer, the UK is an obvious destination, and high operating costs combined with this overcapacity have created significant challenges for the sector.

Key Takeaways

The practical consequences of the new Steel Strategy, particularly its trade measures, are likely to be felt across a wide range of transactions and projects.

Projects with Steel Procurement Requirements

The 50% out-of-quota tariff introduces a new material cost risk for projects with steel procurement requirements. This is particularly acute for offshore wind, nuclear and infrastructure projects with substantial steel requirements. Projects with procurement timelines falling outside the transitional arrangements need to be promptly evaluated. Contractors should map out their steel procurement by country of origin and delivery date, to reduce their contractual risk exposure on steel they directly procure, and to evaluate whether to re-price. Project sponsors and lenders should stress-test financial models against the potential for quota exhaustion and the triggering of the 50% rate.

Early-Stage Transactions

For transactions currently in documentation or procurement, the change in import regime raises important questions about risk allocation in project contracts. Contractors will often bear duty costs which arise post-contract, and change-in-law clauses are unlikely to be broad enough to cover changes under statutory instruments on tariffs.

Pricing disputes may arise if the contractor priced their tender before the publication of the Steel Strategy. Contractors may argue that the new trade measures should entitle them to higher rates, or more time. Contracts will need to be reviewed to assess who bears the risk for this change, and whether it was adequately allowed for in the tender price.

Offshore Wind Developers

Developers bidding into Allocation Round 8 should consider how UK steel sourcing commitments may fit into their supply chain sustainability strategy. Including a UK steel manufacturer in the procurement may strengthen an application, and developers who engage early with domestic producers to establish clear sourcing commitments will be better placed to make compelling bids.

Lenders and Investors to the Sector

Lenders and investors should ensure their due diligence covers steel procurement and origin, as construction-phase costs will typically be a significant factor in debt sizing. The construction contingency should also be reassessed – is it still adequate given the risk of a 50% tariff rate?

Conclusion

Review of existing and pipeline procurement contracts and careful attention to the status of transitional arrangements are essential to navigating the new strategy effectively. This should be done as soon as possible in the narrow window before 1 July 2026.

White & Case will continue to monitor developments closely. Please do not hesitate to contract us if you would like to discuss the implications of the Steel Strategy.

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_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

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