Britain’s fighter jets could face disruption and its nuclear submarines could spend longer languishing in dock if Labour presses ahead with steep new steel tariffs, senior figures in the sector have warned.
Companies that provide specialist steel for some of the UK’s most sensitive defence projects have described the government’s plan to introduce a 50 per cent levy on imported steel from July 1 as “madness”. They argue it risks driving up military procurement and maintenance costs just as Sir Keir Starmer is reportedly considering a £4.5 billion reduction to defence spending.
Ministers insist the measure is necessary. They say that with the US, Canada and the EU putting up their own barriers on steel, the UK could otherwise become a dumping ground for cheap, state-backed foreign imports — a scenario they warn could wipe out what remains of Britain’s steelmaking base.
The government’s case is that inaction would be more damaging. Without protection, officials argue, the market could be swamped by low-cost steel, much of it from China, leaving domestic producers unable to compete and pushing the industry closer to collapse.
But suppliers working directly on Ministry of Defence contracts say the policy could have an unintended consequence: weakening the very defence capability it is supposed to help secure.
The warning follows reports earlier this month that all five of Britain’s nuclear submarines are currently in dock awaiting maintenance. Industry sources fear that delays could worsen once the new tariffs take effect.
“It’s going to affect the ability to defend ourselves as a country,” said Sonja Skelton, director of West Special Fasteners, a firm that manufactures components used in Britain’s submarine fleet.
“This is very serious stuff. Submarines that come back after a tour need planned maintenance, but there now could be delays because if prices go up, it will cause panic — there could be issues with getting the raw materials that they need, which are all likely to have a 50 per cent tariff on them from July 1.”
The entire UK nuclear submarine fleet is unfit for war and stuck in dock, and steel industry insiders say that delays could continue as costs will balloon because of these heavy tariffs
Defence Secretary John Healey resigned this month and said Keir Starmer’s defence pledges fall ‘well short of what is required and ‘could make the country less safe’
Alex Bailey has spent his career supplying specialist steel to the companies that build Britain’s military aircraft and other advanced manufacturers at his firm Dynamic Metals, which employs 75 other people.
But faced with £3.5 million in overnight extra costs – the direct consequence of Labour’s new import tariffs – he is terrified for his business’s and employees’ future.
‘It’s madness,’ he told the Daily Mail. ‘I’ve never seen anything like it in my lifetime.’
Mr Bailey’s company imports foreign specialist steel, which is used in building aerospace military hardware like fighter jets under Ministry of Defence contracts.
His organisation is part of a vast supply chain network vital for Britain’s national security that is now under threat.
Hundreds of businesses like his, he says, face a stark choice within six to 12 months: absorb costs that will make them unviable, or shut up shop entirely.
‘There’s potential for holding up and delaying development in the aerospace defence sphere because manufacturers might shift their operations elsewhere to avoid the tariffs,’ he warned.
‘At the very least, it will put the prices up on aircraft, which will put strain on the government, which is already tight on expenses.’
His co-director Sam Excell fears the damage will be permanent. ‘This is a killer for UK manufacturing because once it’s gone, it won’t come back. You’ve got India and China desperate to get our business because we’ve got the expertise, but once that goes, it doesn’t come back.’
However, ministers say they have been left with no choice but to reduce the tariff-free quota on foreign steel by 60 per cent and jack up the levy on imports above the limit to 50 per cent on July 1.
Industry Minister Chris McDonald told the Commons last week that it was ‘simply wrong’ that only 30 per cent of the steel used in Britain comes from British mills.
Without action, he warned, the country risked becoming ‘the global dumping ground for subsidised steel.’
‘If we do not act, we will not have steelmaking in the UK,’ he said. ‘The US, Canada, and the EU are all acting – we must too.’
Global steel markets have indeed been shifting, as Mr McDonald pointed out.
America and Canada introduced their own 50 per cent steel tariffs last year. The EU is set to follow on the very same day Britain’s measures come into force.
Director of Dynamic Metals Sam Excell has called for the cancellation of the tariffs or for the changes to be slowed down so the steel industry can adapt
Dynamic Metals co-director Alex Bailey said that aerospace defence contracts will ‘definitely be affected’ by the crushing 50 per cent tariffs. Here an RAF Eurofight Typhoon taxis for take off at RAF Coningsby
Keir Starmer has reduced his defence spending pledge for £18billion to £13.5billion, which Mr Excell believes will be ‘eroded’ faster than necessary due to the proposed tariffs
With cheap, state-subsidised foreign steel flooding global markets and undercutting domestic producers, the argument for protecting what remains of Britain’s steel industry is a real concern.
But industry insiders say the government is making a fatal mistake by assuming Britain can absorb the same shock as its larger rivals.
‘The US steelmaking industry has far bigger capabilities than the UK,’ said Mr Excell. ‘We are minuscule compared to them, yet we’re trying to implement the same policies.’
The timing could scarcely be worse. Starmer is understood to be weighing a cut to the defence budget from £18 billion to £13.5 billion – a decision that cost him his Defence Secretary, with John Healey resigning on June 11 and warning in a scathing letter that the Prime Minister’s plans fall ‘well short of what is required’ and ‘could make the country less safe.’
Now those who supply the steel that keeps Britain’s defences running warn that the tariffs will quietly devour whatever is left.
‘That £13.5 billion will be severely hampered by the 50 per cent tariffs on a lot of steels and alloy steels that are used in these projects,’ said Mr Excell. ‘In effect, they’re not getting as much for their money.’
Shadow Business Secretary Andrew Griffiths put it more bluntly in the Commons, warning that the tariffs ‘will just get added to the bill for the Ministry of Defence.’
The damage, insiders say, will not stop at the barracks gates.
Dynamic Metals also supplies specialist steel for Formula 1 teams, commercial aircraft manufacturers and wind turbines.
Mr Excell said: ‘Things like HS2 or Hinkley Point power station – government infrastructure projects – all these things are going to be hit massively with these tariffs.’
Perhaps the most troubling aspect of the crisis, those in the industry say, is that the policy cannot even achieve what it sets out to do – at least not quickly enough to matter.
For a steel mill to be certified to supply specialist grades used in defence applications, it must go through years of rigorous accreditation. Britain’s decimated steelmaking industry cannot conjure that capacity from thin air before July 1.
In the meantime, manufacturers will face higher costs, restricted supplies, and what Mr Bailey fears will become an effective monopoly held by the handful of domestic mills that do qualify – allowing them to charge whatever they like.
‘We would love to see British steel come back and be successful – don’t think for a second that we don’t,’ he said.
Other industries from power generation – like here at Hinkley Point Nuclear Powerstation – to Formula 1 will also be affected by these tariffs
Liberal Democrat MP for Harpenden and Berkhamstead Victoria Collins said: ‘At a time when we’re focused on strengthening Britain’s defence, resilience and economic security, the last thing we should be doing is making life harder for British manufacturers’
‘To buy domestically would be incredible, but when the costs are that much higher and the availability just isn’t there, we have to go elsewhere. And to reverse that is going to take a very long time.’
Europe, meanwhile, stands ready to hoover up every contract, every company and every skilled worker that the tariffs push out of Britain, Mr Bailey warned.
There is no shortage of capacity on the continent, insiders warn, and firms under financial pressure will not wait to be asked twice.
‘The measures risk accelerating the UK’s decline of its manufacturing base rather than preserving it,’ Mr Griffiths told the Commons.
Lib Dem MP Victoria Collins, who has raised the issue directly in Parliament, said the government had its priorities exactly backwards.
She told the Daily Mail: ‘We should be backing British businesses, not holding them back.
‘At a time when we’re focused on strengthening Britain’s defence, resilience and economic security, the last thing we should be doing is making life harder for British manufacturers.
‘What is happening to firms like Dynamic Metals is choking growth, putting skilled jobs at risk and weakening the industrial base that underpins both our economy and our national defence.’
Last Monday, Dynamic Metals joined companies from across the supply chain at a parliamentary round table – a last-ditch attempt to force ministers to listen before the clock runs out. Even Airbus sent a delegation.
‘That just shows how big a problem this is and the potential ramifications for the UK,’ said Mr Excell.
However, a spokesperson from the Department of Business and Trade told the Daily Mail: ‘We want a thriving steel sector in the UK, which is why our new trade measure aims to strike the right balance between protecting domestic production and maintaining a secure supply, given the importance of steel to our defence.
‘Steel imports are essential for UK industry, which is why quotas will allow business to import enough steel tariff-free, avoiding unnecessary costs.’
Mr Bailey is unconvinced. The tariffs land on July 1. The accreditation process for new British mills takes years. And the supply chain that keeps Britain’s submarines at sea and its fighter jets in the air, he says, cannot survive in the gap between the two.
