In response to Trade Secretary Liam Fox's announcement that the UK will seek an exemption from President Donald Trump's tariffs on steel imports to the US, Alex Griffiths, Wood Mackenzie Senior Research Analyst, said:
"We should expect this move and similar moves by other steel supplying nations to the US – it is the easiest way for a nation to protect itself from these duties.
"The UK supplies high value-added steels to the US – steels that, in the short term, US users will struggle to source domestically. Import tariff in the US will hurt UK producers as they are likely to be asked to absorb a proportion of the tariff, or lose out to US domestic producers entirely. Similarly, a tariff will hurt US buyers who will also have to absorb a proportion of the tariff, or search domestically for an alternative source of a hard-to-come-by steel.
"This situation applies to most EU steel suppliers to the US. The logical inference is that EU producers will be exempt from tariffs as applying them would hurt the US just as much, if not more, than the EU. But it remains to be seen if logic will play out.
"A further question is – can the UK be granted an exemption on its own? It still trades as part of the EU trading block and therefore its fate is tied to the other 27 EU nations."