The government has announced a major shift for UK manufacturing in its latest Steel Strategy, with a dedicated push to boost British production and cut imports, as 50% tariffs on non-quota imports are expected.
One of the continuing challenges for UK factories is the price of energy. The ongoing Middle East war has seen more damage to the world’s supply of oil and gas, after two major sites were targeted in military strikes.
UK’s steel gambit
The UK has doubled its steel tariffs, in what is being hailed as a landmark move for the UK’s manufacturing sector.
In the newly released Steel Strategy, steel imports into the UK will now be subject to a 50% tariff.
During a visit to Tata Steel’s site in Port Talbot, business and trade secretary Peter Kyle announced new targets for UK manufacturing: between 30 and 50% of steel needs are to be met through domestic supplies, with half of this sourced in Wales.
“We welcome the government’s Steel Strategy as a vital step towards securing a competitive, resilient future for one of the UK’s most strategically important industries,” said Gareth Stace, director general of UK Steel,
“This is a significant moment, and government ministers deserve recognition for their leadership today.”
Kyle told the BBC that the targets were “ambitious”,
"But also, I need to defend the sector from anti-competitive behaviour from elsewhere in the world."
The UK is now the latest nation to apply tariffs to protect its domestic steel industry. Both the EU and US have imposed measures in the last year, while China has faced significant criticism for heavily subsidising its own domestic industry.
Shadow business and trade secretary Andrew Griffith said: "Raising the cost of imported steel means more cost for the construction industry, less infrastructure investment and is a further blow to the diminishing number of firms making things in the UK."
US/Israeli-Iran war
Energy prices have continued to rise, as crucial parts of the oil and gas global infrastructure have been targeted by both sides of the conflict.
The Israeli military struck parts of Iran’s South Pars gas field, one of the world’s most important sources of liquified natural gas (LNG) yesterday (18 March). Later, European natural gas prices jumped by 35% after Iranian missiles struck the world’s largest gas plant in Qatar, with fears that extensive damage could hurt production for months.
Qatar Energy confirmed that there had been “extensive damage” to Ras Laffan Industrial City gas facilities on Wednesday, with another attack on Thursday morning (19 March) causing “sizeable fires and extensive further damage” to the company’s LNG facilities. No casualties were reported.
On social media, US President Donald Trump said that there would be no more strikes against the South Pars field, which he squarely blamed on Israel. However, he added that if “Iran unwisely decides to attack a very innocent, in this case, Qatar”, then the US would “massively blow up the entirety of the South Pars Gas Field at an amount of strength and power that Iran has never seen or witnessed before.”
Reuters reports that the US is considering deploying thousands of troops as part of the war effort, which shows no sign of slowing down on either side.
A top US security official, Joe Kent, resigned over the war earlier in the week, saying that Iran posed no “imminent threat to our nation”, amid growing signs that Trump’s political base remains uneasy over both the war and the economy ahead of the midterm elections in November.
Economy
Economists have raised their expectations for UK inflation following the war in Iran and the corresponding energy price rise.
The Treasury’s summary of independent forecasts found that most expected inflation to rise to 2.6% by the fourth quarter of this year, above the 1.9% predicted by the Office for Budget Responsibility earlier in the year.
The Bank of England (BoE) held rates at 3.75% during their monthly rate decision making today, in line with market expectations. Before the war, most economists had expected at least two rate cuts this year but these expectations have been dashed by the rising energy costs.
The Office for National Statistics’ (ONS) latest insights on the economy found that economic uncertainty was the most common challenge reported by many firms, with 32% of respondents choosing this as their major concern.
Additionally, more than 1 in 5 businesses expect the price of the goods or services they sell to increase in April 2026, while 29% said they were paying more for the price of goods or services.
Consumer activity also slowed last month, although more firms reported a month-on-month increase in turnover in March and potential redundancies fell slightly, by 2%.
Other news
· London mayor Sadiq Khan urged his Labour party to campaign on rejoining the EU at the next election, citing the economic instability created by Trump, in comments made to Italian newspaper La Repubblica
· Chancellor Rachel Reeves announced a £2.3bn boost to the UK’s major cities in yesterday’s Mais Lecture, with particular focus on Northern cities like Manchester, Leeds and Liverpool, as the government looks to drive economic growth through technology, AI and investment
· Two shipments of Russian energy are heading to Cuba, despite opposition from the US, as the Central American nation looks to stave off its own energy crisis
Yesterday in Trade
· Reeves gave the annual Mais Lecture in London, where she committed to improving relations with Brussels and to devolve more power to the UK’s nations and regions
· Iraq and Kurdistan struck a deal to revive an energy export route out of the Middle East, creating an alternative to the Strait of Hormuz
· Belgium’s top customs official, Kristian Vanderwaeren, warned that removing the EU ‘de minimis’ threshold of €150 will have a limited impact on cheap Chinese imports
You can read yesterday’s trade news here.
