Donald Trump has risked a transatlantic trade war by revealing he will impose a 25 per cent tariff on all steel imports in a move that could have a “devastating” impact on the UK industry.
The US president’s move spooked investors, with stock markets in Asia on Friday extending a Wall Street rout.
Mr Trump said he planned to make the announcement next week and also said there would be a 10 per cent tariff on aluminium..
It came despite fierce lobbying from British cabinet ministers and officials as well as infighting among senior Trump administration figures over the repercussions.
Is is not clear whether the tariff will be put on all global steel imports – hitting the UK – or just on a select number of countries including China and India.
The tariff amounts to one of the biggest pieces of trade protectionism adopted since Mr Trump took office and could trigger barriers being raised by those countries affected.
Mr Trump said on Thursday the tariff would be put in place “for a long period of time” but did not go into specifics.
The Dow Jones industrial average dropped more than 500 points in the hours after the news – a decline of close to 2 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.1 percent, led by a fall in South Korean shares while Japan’s Nikkei tumbled 2.9 percent. For the week, they are down 2.3 percent and 3.6 percent respectively.
If Britain is included in the tariff it could have a major impact on the industry, which has been in decline for years in terms of production.
Some £360 million of Britain’s yearly steel exports to America would be impacted by the tariff, according to an official in the Business, Energy and Industrial Strategy Department.
Britain, Canada, the European Union and leading Republicans like Paul Ryan, the House speaker, all expressed concern over the move.
Jean Claude Juncker, the European Commission president, hinted at a trade war as he said: “‘The EU will react firmly to defend our interests.
“The Commission will bring forward in the next few days a proposal for countermeasures against the US to rebalance the situation.”
Officials involved in attempts to dissuade Mr Trump had told The Daily Telegraph they were “deeply concerned” by the Trump administration’s thinking on protecting US steel.
Cabinet ministers including Greg Clark, the Business Secretary, and Liam Fox, the International Trade Secretary, had made private appeals against the move.
Union sources told this newspaper the policy would have a “devastating” impact on the UK steel industry and hit British Steel, Liberty, Tata Steel in particular.
Mr Trump was recommended intervention by his commerce secretary, Wilbur Ross, after concluding steel imports “threaten to impair the national security”.
The president was given three options: A 24 per cent global tariff on all steel imports, a 53 per cent tariff on just 12 countries including China and India but excluding Britain, or a quota of all steel products equal to 63 per cent of each country’s 2017 exports to America.
Mr Trump reportedly favoured a 25 per cent figure rather than the 24 per cent recommended because it was a round number.
British ministers who lobbied hard against the decision said they had been previously reassured that the UK was not the target for the action.
A British government spokesman said before the decision: “We have made very clear to the US that we are deeply concerned by any measures that would affect the UK steel and aluminium industries.
A trade union source involved in opposing the tariff said of about a major steel tariff: “It will be devastating for British steel.”
Mr Clark had lobbied the US government to abandon the plan on no fewer than four occasions since November, including twice with Mr Ross.
A new tariff from America would be a major blow to a British steel industry that has struggled in the wake of the financial crash.
Steel production in Britain has dropped from more than 18,000 tonnes in 2000 to around 10,000 tonnes in 2015, according to the International Steel Statistics Bureau.
Reacting to the news, A UK government spokesman said: “We are engaging with the US on what this announcement means in practice.
“We have been clear that we are particularly concerned by any measures that would impact the UK steel and aluminium industries.
“Overcapacity remains a significant global issue and we believe multilateral action is the only way to resolve it in all parties’ interests.”
Chrystia Freeland, the Canadian foreign affairs minister, warned that the country would raise trade barriers if Mr Trump pushes ahead with the tariff.
“Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers,” she said in a statement.
“The Canadian government will continue to make this point directly with the American administration at all levels.”