Steel tariffs are one of Boris Johnson’s ‘worst decisions’, says former trade secretary

·3 min read
Liam Fox, Boris Johnson's former candidate to lead the World Trade Organisation, has condemned the Government's 'protectionist' policy - FABRICE COFFRINI
Liam Fox, Boris Johnson's former candidate to lead the World Trade Organisation, has condemned the Government's 'protectionist' policy - FABRICE COFFRINI

Boris Johnson's former candidate to lead the World Trade Organisation has described the Prime Minister's decision to impose "protectionist" steel tariffs as "one of the worst decisions taken by this Government".

Writing for The Telegraph, Liam Fox said the UK should "show leadership on free trade" rather than "damaging our global reputation and putting other sections of our economy at risk".

He urged Mr Johnson to ditch the tariffs, "if this is not to be a Conservative government in name only".

The intervention by Dr Fox, a former trade secretary, comes after Anne-Marie Trevelyan, who now holds the trade brief, announced a two-year extension of tariffs on steel imports, despite admitting that the move "departs from our international legal obligations" under WTO rules.

A series of decisions taken by Ms Trevelyan last week will also result in tariffs being imposed on steel imports from developing countries such as Korea, that are not currently subject to the tariffs.

Mr Johnson is hoping that the move will help to shore up the Conservatives in the Red Wall, where domestic steel firms have complained they are being undercut by imports from abroad.

Ms Trevelyan told MPs that the UK steel industry, which employs some 33,000 workers, would face "serious injury" if the tariffs were lifted, adding that "it is in the economic interest of the UK to maintain these safeguards, to reduce the risk of material harm if they were not maintained".

But, last week, British manufacturers that rely on imported metals called on the Government to allow them to import more steel products without paying tariffs because domestic suppliers have failed to meet demand. They are now facing 25 per cent duties on a key raw material.

'We need to show leadership on free trade'

Dr Fox said: "Protectionism, like inflation, always hits the poor hardest. This will be no different as Britain breaches our WTO commitments with our steel measures and the consequences will be essentially the same as with the Trump administration.

"While artificial protections may diminish the pressure on a few UK steel producers, retaliatory measures by those countries whose exports are hit are likely to impact on other areas of the UK economy. South Korea, with whom Britain has trade worth £13.3 billion, is unlikely to stand by and watch its steel exports restricted without taking measures of its own.

"The Scotch whisky industry, cashmere, ceramics, and folding bikes may well find themselves all on the receiving end of retaliatory measures, WTO sanctioned. The car industry, so vital for much of the north-east of England, could find its supply chains even more badly disrupted than they have been because of the pandemic."

The former defence secretary added: "We need to show leadership on free trade. We must find a solution for the steel industry that will not involve damaging our global reputation and putting other sections of our economy at risk.

"Choosing protectionism is one of the worst decisions taken by this Government ... We need to find another answer to the problem if this is not to be a Conservative Government in name only."

In 2020, Mr Johnson formally backed Dr Fox's unsuccessful bid to lead the WTO, saying that he had the “political and technical” experience to ensure that the global trading system “delivered” for all member states.

A Government spokesman said the decision was taken in order to "support a critical national industry" and followed "careful consideration of the balance between our national interest and international obligations.

“The measures have cross-party support and the backing of industry, and are also applied by other countries with steel industries to balance out unfair international trading practices,” they added.