Labour Have Taken a Trumpian Turn

Britain is making a very American mistake. Eight years after the United States used ‘national security’ concerns to justify sweeping steel protectionism that ended up hurting steel users far more than it helped steelmakers, Westminster has reached for the same, depressing script.

The Government’s new steel strategy might not be a blanket tariff, but its 60% cut in steel import quotas and 50% tariff beyond it point in the same direction: a broad protectionist measure sold under the guise of a defence necessity. As with the US, once ‘national security’ enters trade policy, it rarely stays confined to real-world military needs, or even option-ready future capacity. The fact that the Government is aiming for a target of 50% of the country’s total steel needs being met by domestic production tells you this isn’t a military safeguard, but a crude industrial policy.

Indeed, it’s classic Trumpist thinking. As the first Trump administration began its ‘Section 232’ investigation into protecting steel for national security reasons, Jim Mattis (then Defence Secretary) admitted that the military there only required 3% of total domestic production. It made no difference. Trump pressed on with an additional 25% tariff on steel and aluminum anyway. Once the security exception is available, it does not stay confined to actual military necessity. It becomes an all-purpose argument for shielding domestic producers from competition.

And what did America get for it? The US International Trade Commission (USITC) estimates that Section 232 cut imports of affected steel products by 24%, as intended, but raised US steel output by just 1.9%, and increased the average steel price by 2.4%. Even that ‘modest’ average disguises where the pain landed. Covered steel imports became much dearer, but the overall price effect was muted because imported steel was a relatively small share of the US market, the tariffs led to huge lobbying for exemptions for various importers, and buyers shifted towards non-covered imports. This was not costless policy. It was leaky protectionism.

Yet leaky protectionism still hurts. The USITC found that downstream industries using steel and aluminium as inputs suffered lower output, with production down 0.6% a year on average and domestic output in those sectors $3.48 billion lower in 2021 because of the tariffs. Federal Reserve economists likewise found that tariff-exposed manufacturing industries saw employment fall, as input costs and retaliation outweighed protection. Kadee Russ and Lydia Cox built on those estimates to conclude that the 2018 steel and aluminium tariffs may have added roughly 1,000 jobs in steel production, while costing around 75,000 jobs in metal-using manufacturing. A Peterson Institute analysis put the asymmetry differently: steel users paid about $650,000 in higher costs for every steel job created.

Britain looks even more vulnerable to such effects than the US was. Before Section 232, America’s steel imports represented about 27% of total consumption. In Britain, domestic production met only 30% of domestic demand in 2024, implying imports supplied roughly 70% of the market. Ministers here are not nudging a largely self-sufficient market; they are trying to re-engineer one already heavily dependent on imports.

Nor is the labour market arithmetic remotely flattering to the policy. Our own steel industry employs around 40,000 people. But the construction industry that requires steel alone employs almost 2.6 million across England, Scotland and Wales. Automotive manufacturing employs more than 183,000, and aerospace supports about 100,000 direct jobs. The asymmetry is unmistakable: by raising input costs on these far larger sectors, the Government is taking risks for vastly more workers downstream than it will protect upstream.

Then there is the national security reasoning itself. The Government’s own consultation says the UK uses around 9–11m tonnes of steel a year. Around 36,000 tonnes were required in 2022/23 for UK public procurement for defence. On the Government’s own numbers, that is roughly 0.3 to 0.4% of annual steel demand. Even UK Steel’s broader reading of the Ministry of Defence pipeline points to at least 82,000 tonnes: still below 1% of annual consumption. If this were about national defence, the Government could secure specific grades and capacities through contracts, stockpiles, or targeted support. It would not slap a broad tax on inputs used across the rest of the economy.

Britain is, at present, exercised about what international oil shocks do to prices, growth and living standards. Yet we are now asked to believe it is enlightened statecraft to impose a steel price shock on ourselves. America has already shown where this road leads: to a policy advertised as national security, executed as protectionism, and paid for by builders, manufacturers, infrastructure projects, and ultimately, consumers. Making steel more expensive for the whole economy is not a particularly clever way of making the nation safer. It is, however, an admirably efficient way of making a great many other things more expensive.