A long-coveted deal to slash US steel and aluminium tariffs to zero has been shelved on the eve of Donald Trump’s state visit to Britain, the Guardian has learned.
Ministers were poised to finalise a deal this week that would have reduced Trump’s tariffs on British steel to zero, according to government officials.
But that deal has been put on ice hours before the US president’s arrival in the UK, in what steel industry figures privately described as a major blow.
A government source said the deal would have secured 0% tariffs on just a small quota of British steel exports, prolonging uncertainty for the industry.
Instead, ministers are seeking to agree a permanent “guarantee” that US tariffs on British steel will not go above 25%. Other countries face tariffs of 50% on their steel exports.
However, another government source said that under the deal that had been negotiated, but has now been shelved, the steel export quota would have increased once US concerns about the source of Britain’s raw material imports were resolved.
The disclosure will raise questions about why the proposed deal has fallen apart at the last minute. It marks a fresh setback for Keir Starmer after a difficult two weeks dominated by the resignations of three senior government figures and mounting questions about the prime minister’s judgment.
Ministers are hoping that deals with the US on technology and nuclear energy this week will give the government a boost.
The trade deal announced by the US and UK in May was supposed to reduce tariffs on steel from 25% to 0%, but its implementation was put on hold over US concerns about the UK becoming a backdoor for cheap steel imports from other countries.
Speaking before his flight to London, Trump had raised hopes of a breakthrough by saying the UK government would “like to see if they could get a little bit better deal, so we’ll talk to them”. Ministers insist that negotiations with the US over reducing the steel tariff to zero are ongoing.
A government spokesperson said: “Thanks to the strength of the UK-US partnership, we are still the only country to benefit from a 25% tariff on steel exports to the US, reinforcing our position as a trusted source of high-quality steel.
“We are continuing to work closely with the US to deliver certainty for UK industry, protect skilled jobs and support economic growth as part of our plan for change.”
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Steel industry figures, who had expected a 0% rate on exports, expressed disappointment at the news.
“It’s disappointing – perhaps not 100% surprising,” said one steel industry executive. “Some products might not be possible to sell to the US. Others we can pass it on. It could be worse.
“Getting certainty is sometimes better than just continuing negotiations. That period of uncertainty has been really quite difficult to handle for steel companies.”
Another industry insider said they were relieved that UK exports would continue to have an advantage over those from the EU, which face prohibitive tariffs.
Gareth Stace, the director general of UK Steel, said it would be “disappointing if we do not have the tariff-free quota level” but that a “final decision on 25% offers a degree of certainty and potentially a competitive advantage so long as other countries remain at 50%”.