The Government’s new steel trade measure came into force on 1st July. These tarriffs reduce steel import quotas by 51%, with imports above these levels now subject to a 50% tariff. Following concerns raised by industry, the reduction is less than the 60% originally proposed, but the cost of delivering projects is still expected to increase significantly. Price rises of between 14% and 18% are currently being reported on projects, placing even further inflationary pressures on the construction supply chain.
The new UK steel measures have been introduced primarily to protect domestic steel producers from a growing volume of lower-cost imported steel, much of which the Government argues is being diverted into the UK market because of trade restrictions elsewhere (particularly the US and EU). The Government has also linked the measures to national security, resilience of critical infrastructure supply chains, and preserving UK steelmaking capacity.
The Government has confirmed that the quotas will be reviewed every 12 months, but the industry is pushing for this to be reduced to six months, warning that businesses are facing unsustainable financial pressures and there is a high risk of insolvencies. There is a transitional arrangement in place, which means that the new quotas and tariffs will not apply to steel under contract before 14 March 2026 and imported between 1 July and 30 September 2026.
This issue is subject to ongoing discussions between the Construction Leadersship Council and Government with the main concerns being:
Commercial impact: Structural steel prices have risen sharply. Market volatility has significantly increased, reducing the ability to forecast costs accurately and increasing commercial risk on lump-sum contracts.
Project viability: Evidence from the sector indicates that the proposed measures are already affecting scheme viability, with cost increases of 14–18% being reported on live projects and per-unit cost increases of up to £4,000 on residential developments which will further impact on the Government’s house building target.
Carbon impact: High tariffs on imported low-carbon steel may unintentionally force projects to procure more carbon-intensive domestic alternatives, with the potential to undermine project sustainability targets and embodied carbon reduction strategies.
Supply impact: The quota system creates significant risk of supply shortages for steel grades and section sizes where domestic mills are either at full capacity or do not manufacture the required products.
Critical issues for fabrication manufacturers: While the steel strategy is primarily intended to benefit the main producers, there are serious unintended consequences likely for the UK’s fabricated steel sector which employs approximately 60,000 in the UK. Concerns continute in the steel fabrication sector that the omission of fabricated steel products from the new quota and tariff framework leaves UK manufacturers facing higher input costs, whilst overseas competitors can continue importing fabricated steel into the UK without equivalent quota restrictions. The concern here is that clients will be incentivised to move fabrication overseas, putting up to 30,000 UK jobs at risk.
Lead time impact: Uncertainty around quota availability has already triggered “panic buying” behaviour, increasing short-term demand and extending procurement lead times. This volatility makes programme certainty increasingly difficult for contractors and clients.
FIS members purchasing steel are advised to consult carefully with their supplier on lead times/availability and any potentialy impact on future pricing of works and looking at how fluctuation clauses are implemented on projects with longer lead time (advice available via our legal toolkit Q&A and helpline)
Full details available here.