The UK has shelved its talks with the US aimed at eliminating tariffs on British steel, in a recognition that giving Donald Trump the honor of a rare second state visit wouldn’t be enough to shake the American president off a key trade stance. 

The UK has scaled back its goals of bringing the levies on steel to zero, according to a person familiar with the matter, representing a blow to an industry which has been waiting months for the removal of the 25% levy. Instead, British officials expect commitments that tariffs on steel would remain at 25%, said the person, who asked not to be named while discussing a policy change that hasn’t been announced. That’s less than the 50% slapped on other countries’ exports, but still a level that local companies have called damaging.

A failure to remove the tariffs will undercut assessments of the state visit, which Prime Minister Keir Starmer hopes will help covert Trump’s interest in Britain and royal pageantry into diplomatic wins. King Charles III is preparing to host the American president at Windsor Castle later Wednesday, including carriage processions and a lavish banquet. 

The decision comes even as Trump signaled he was open to some trade concessions to the UK to ease implementation of their tariff deal announced in May. “They want to see if they can refine the trade deal a little bit,” Trump told reporters at the White House before departing, adding “we’ve made a deal, and it’s a great deal, and I’m into helping them.”

Meanwhile, Microsoft Corp., OpenAI and other American companies announced plans to spend tens of billions of dollars on technology infrastructure in the UK on Tuesday. Trump during his state visit is also expected to announce more than $10 billion in new economic deals, as well as other efforts to align the nations’ financial sectors.

British drugmaker GSK Plc also pledged also to invest $30 billion in the US over the next five years. 

A state visit that fell short of the framework announced by Trump and Starmer four months ago will fuel criticism of the strategy by Starmer — and his recently sacked US ambassador, Peter Mandelson — to court a president whose policies have long been unpopular in Britain. Trump arrived in the UK to planned protests in London and Windsor, with Thames Valley Police saying they arrested four adults in connection with images of Trump on Windsor Castle.

“On 8 May, the prime minister claimed credit for negotiating steel tariffs to zero. Now, it turns out that was untrue and it’s actually 25%,” said Andrew Griffith, business and trade spokesperson for the Conservatives. “Either his maths or his relationship with the truth clearly needs some work.”

The Financial Times first reported the UK’s decision to pause talks on eliminating tariffs. 

The UK will continue talks with the US to ax steel tariffs over time, the person with knowledge of the government’s thinking said. However, the commitment reached between officials ahead of Trump’s arrival in London will be a disappointment to businesses who had hoped the visit would finalize an earlier agreement promising the removal of tariffs on UK steel.

Under a trade deal hammered out between the two countries in May, Trump pledged the removal of tariffs on steel imports from Britain. But while other elements of the agreement have come into force, the commitment on steel proved problematic. 

At the heart of the disagreement is a US insistence that steel must be “melted and poured” in the UK to be able to take advantage of the tariff exemptions, a requirement which Tata Steel UK, one of the country’s largest steel producers, can no longer fulfill after closing its last blast furnace last year.

The person familiar said the commitment to keep steel tariffs at 25% would provide clarity to the industry, and would still make the UK competitive given tariffs on other countries’ exports are double the amount.

UK Steel Director General Gareth Stace said he was still holding out hope for some reduction in the American levies, citing Trump’s comments before leaving Washington. But he said potential limits on how much British steel the US was willing to accept at lower rates would complicate any path to a deal.

“I think what we realized in the end that 25% on unlimited exports might be better than a very restrictive, tariff-free quota, but paying 50% for everything else,” Stace told the BBC on Wednesday. 

The US and the UK were also set to announce closer cooperation on digital assets including cryptocurrencies, the Financial Times reported separately. The pact was discussed during talks on Tuesday between Chancellor of the Exchequer Rachel Reeves and US Treasury Secretary Scott Bessent, the paper said, citing people familiar with the matter.

US officials briefing reporters about the trip earlier this week on the condition of anonymity declined to say if they expected progress on the metals tariffs, while indicating they were unlikely to see an announcement on a push by Starmer to lower levies on whisky.

“Our country is doing very well. We’ve never done this well,” Trump said Tuesday. “We’re having trillions of dollars coming because of the tariffs, and they’d like to see if they could get a little bit better deal.”

Source: MSN

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