The uk steel strategy: a monumental failure of british policymaking

Why and how industrial policymaking goes so wrong

Amy Tinley, Deputy CEO and Tamsin Morgan, Senior Consultant

Executive summary

The UK's new steel trade measures are not a sexy or widely worried about topic amongst the general population - unless you make, process or trade it. Yet this seemingly innocuous piece of trade policy represents a perfect case study in the failure of modern British industrial policymaking.

Set to take effect from 1 July 2026, the Government has announced a diluted set of trade measures that will reduce tariff-free steel import quotas (the limit on how much steel a country can import without paying extra taxes), by 51% (not 60% as originally stated) and impose a 50% tariff on imports exceeding those thresholds. Huge. 

The measures are designed to protect the domestic primary upstream steelmakers - producers that manufacture steel from raw materials - against China’s aggressive export of excess steel into international markets. Yet, at the same time, they risk creating substantial unintended consequences for the much larger downstream manufacturing base that relies upon imported steel. This is directly counter to the Government’s stated objectives on growth, industrial competitiveness and economic security. 

Broader elements of the Steel Strategy reinforce this direction of travel, including support for decarbonisation through the transition to Electric Arc Furnace (EAF) technology and the introduction of a Carbon Border Adjustment Mechanism (CBAM) from 2027. Taken individually, the intent of each measure is sound. Collectively, they are and will cause devastating consequences. 

The strategy itself has already demonstrated a stark failure to properly understand the UK's steel supply chain, where many of our manufacturers depend upon imported specialist steel products, which aren’t produced in the UK. It also reflects an overreliance on politically influential stakeholders or ‘big players’, with insufficient weight given to the UK’s complex supply chains and businesses that rely on those imports. 

More fundamentally, the strategy illustrates the archaic structures of UK policymaking - consultation without meaningful engagement, policy design without comprehensive economic analysis, and intervention without sufficient consideration of unintended consequences.

At a time when the Government is seeking to attract foreign investment, strengthen advanced manufacturing capability and improve regional productivity, the Steel Strategy risks undermining the very industrial base it claims to support. 

The failures of the UK’s Steel Strategy should serve as a warning to policy makers of the present and future. 

Update: Eleventh hour policymaking

Announced just six days ago, the Government confirmed a revised package of steel trade measures, following what it described as “intensive industry engagement” and efforts to align, and agree an approach with, the European Union. This, of course, should have been done in the first instance and perfectly illustrates the topic of this article. 

Under the final arrangements, tariff-free import quotas will be reduced by 51% rather than the originally proposed 60%, while imports exceeding those quotas will still face a 50% tariff, up from the current 25% safeguard duty. Crucially, the government has now introduced exemptions for 11 product categories that are not produced domestically. 

While this partial retreat is welcomed, the amends do not go far enough. The new measures are only a slight adjustment to the margins, not a fundamental rethink. The core architecture of the policy remains intact, and the revisions do little to address the underlying design concerns raised by industry. 

In particular, the measures continue to reflect a simplified view of the steel market, treating broad product categories as substitutable despite significant variation in grades, specifications and supply chain requirements. As a result, many businesses remain exposed to higher costs and constrained access to critical inputs.

The eleventh-hour revision only underscores what a colossal failure the policy design process has been. 

5 reasons why the Steel Strategy represents a failure of policymaking

1.Political capture and steel heavyweights

There are legitimate national security and economic reasons for supporting domestic steel production. Steel remains a strategic industry and the collapse of any form of domestic capability would, undoubtedly, leave the UK exposed.

Yet, it is clear that the Government took a one-sided approach to the development of the UK Steel Strategy - framed by upstream steelmakers and the power of trade unions. Typically, those who shouted the loudest won the day. That’s not to mention that steel in the UK is an inherently political topic.

The UK steel debate has for years been shaped by the high-profile crises at British Steel and Tata Steel, where tax payers money has been used to prevent plant closures and job losses. This narrative has led in part, to the political capture of the government machine that has led to the current crisis.   

That being said, the Government should take the question of upstream capacity seriously. But in responding to that pressure, it moved to protect around 35,000 jobs in primary steel production - while giving insufficient weight to the far larger workforce downstream. 

At Bradshaw Advisory, we undertook our own analysis ahead of the strategy publication, and determined that there were around 4.7 million people employed across the UK construction and manufacturing sectors alone who depend on steel as an intermediate input. Primary steel jobs make up less than 1% of that total, yet the Government focussed its attention and subsequent policy on solving their problem instead of the 99%. 

Government representatives acknowledged this imbalance themselves.  In a recent Public Accounts Committee hearing, the Interim Permanent Secretary at the Department for Business and Trade acknowledged that the measures could result in some SMEs exiting the market.

And while the revised measures provide some relief there are still clear winners and losers. The exclusion of fabricated steel products, in particular, has been criticised for protecting certain parts of the market while placing additional pressure on others. 

The lobby power of the big, upstream steelmakers played directly into the political narrative, swaying ‘impartial’ policy makers who should know better. 

2.The absence of UK steel supply chain data 

The Steel Strategy is deeply rooted in the assumption that imported steel can be substituted with British steel. For most product categories, this is far from the reality.

For instance, stainless steel supply chains are extremely complex, where each product category requires advanced and highly specific manufacturing processes. These cannot be readily substituted with alternative steel types. More worryingly they are not available from UK sources.  

Despite the eleven additional product categories that were made exempt from the new trade measures last week, the policy continues to treat all imports as a threat and undermines the complexity of the steel global value chain, and the specialist grades, coatings and dimensions that are unavailable within our borders.

Companies such as Rolls-Royce, Airbus, and the suppliers to Formula 1 teams face a material risk of supply chain disruption, bottlenecks and increased import costs as a direct result of the new measures. These are globally competitive UK businesses operating at the forefront of advanced manufacturing. Their critical supply chains are being placed at risk.

A further contradiction lies in Tata Steel’s own transition plans. As Tata moves to operationalise its Electric Arc Furnaces by late 2027/early 2028, it requires 2.5 million tonnes of scrap steel to operate efficiently. The UK does not yet have the capacity to produce anywhere near that volume. If scrap steel capacity is not swiftly expanded, one of the UK's primary steelmakers will itself face supply chain disruption and increased import costs as a direct result of the Government's own strategy. 

More broadly, the aspiration to increase domestic manufacturing capacity by 20% ignores the timescales involved. Supply chain reconfiguration takes years, not months. Had there been effective cross-government coordination, including input from DBT’s very own supply chain team, there would have been a more sophisticated understanding of these constraints to inform policy design. 

3.Consultation without listening

In February 2025, the Government launched the “Plan for Steel” consultation, followed in June 2025 by a Call for Evidence on replacing the steel safeguard measures. While there were over 100 responses to the first consultation, the government has not published a breakdown of respondents to the second. 

Businesses invest time and resources to respond to consultations - of which there have been plenty under this current government. Yet, when policy bears little resemblance to the views represented, confidence in the process is undermined. Especially when the outcome has been so vastly different to the views expressed. 

On steel, there is limited evidence that concerns raised by downstream manufacturers regarding specialist goods, import dependencies and economic competitiveness were reflected in the final strategy first published in March 2026. 

In fact, the scale of industry backlash was such that the Government was ultimately forced to dilute the policy following what it described as a “programme of intensive industry engagement” between April and June 2026. It cannot have been the case that genuine concerns were factored into the policy process for such a quick and blatant reverse ferret. Opportunities to address fundamental issues in policy design should have been identified and rectified before the measures were first announced. 

The same pattern has played out in the design of the UK’s CBAM architecture. Industry - alongside the cement and chemicals sectors - has repeatedly raised concerns that the Treasury's proposal to apply a single CBAM rate per sector, based on average emissions, risks over - or under-estimating the true carbon intensity of imports, distorting competition and failing to reflect the complexity of modern supply chains. These objections remain unaddressed. 

Having been privy to many government consultations, it is time to acknowledge that they do not materially influence policy design. Policies are often written ahead of consultation, not amended or adapted upon consultation closure, and with limited face-to-face engagement. We accept that there will always be winners and losers and that some responses to consultations are neither helpful nor realistic. But they should still be considered, the counterfactual understood, and a decision made based on all the tools at the disposal of the team. 

And as the Government's principal industry facing department, the Department for Business and Trade should excel in industry engagement. But it does not. Engagement lacks consistency, clarity or purpose. Engaging solely with trade associations, who don’t often represent the nuances of the business members, is folly.

What is required is a fundamentally different approach to engagement - one that draws on the knowledge and experience of those operating across entire value chains of any given sector, and that creates genuine feedback loops between industry dialogue and policy design.

4.Failure to consider unintended consequences

A striking weakness of the strategy is the lack of consideration given to unintended consequences and second-order impacts. This is a significant failure for a set of measures with such broad implications across the UK’s industrial base.

This includes increased costs for manufacturers that will ultimately be passed further and further down the supply chain. 

Speaking to one defence firm, they have made clear that any additional import costs will be passed directly to customers, one of the most significant being the Ministry of Defence. In practice, this means the taxpayer will bear the cost of the Government’s own trade intervention. 

At a time where defence spending is under increasing scrutiny and the MoD faces pressing capability challenges, the dynamic between trade policy and public expenditure appears to have received little attention. 

There is also a risk that the measures simply displace, rather than solve, underlying market distortions. Traders may seek to circumvent the new regime through inaccurate product classification, or other ‘workarounds’ that represent a well-documented pattern of behaviour in response to restrictive trade measures. 

The evasion of UK and Western sanctions against Russia demonstrated the scale and sophistication of such circumvention, eventually requiring the creation of the Office of Trade Sanctions Implementation. 

The new steel measures present similarly significant enforcement challenges and raise questions about whether the UK has the resources and capability to effectively police the new regime it put in place. At a time where the purse strings are tight, should we be introducing measures that require increased expenditure to ensure enforcement?

Perhaps most concerning is the apparent absence of a clear assessment of how trading partners - including China - may respond. China has a well-established track record of economic countermeasures and retaliatory action to what it views as threatening to the Chinese economy. Whether the Government undertook analysis of the likely Chinese response - in both the near and far future, is unclear. 

5.Policy incoherence 

At large, the strategy illustrates a wider problem in policymaking: the inability for policies to be developed with consideration of the Government's broader objectives.

The Government has made clear that economic growth is its central mission. The Industrial Strategy, published only months before the Steel Strategy, focused on targeted interventions, funding, and sector-specific plans for the UK’s eight key drivers of growth. The strategy outlined ambitions to attract inward investment, strengthen advanced manufacturing capability, improve productivity and enhance regional competitiveness.

Yet the new steel trade measures undermine many of these objectives. 

Increasing the cost of a critical industrial input risks making the UK a less attractive location for investment relative to competitor markets. The US Ambassador to the UK - Warren Stephens - has been vocal on this point throughout his first year in post. If the increased costs of steel feed through into infrastructure projects, defence procurement and public expenditure, the Government will continue to fail to attract foreign investment.

Successful industrial economics, including China, Japan and South Korea, take a whole-system approach to policy design, aligning trade, energy and investment into their supply chain strategies, centred around clear long-term economic objectives. 

And at a time where the UK continues to assert the need to strengthen its supply chains and long-term economic security, such interventions as the new trade measures cuts against these broad objectives. 

The UK’s continued siloed approach to policymaking continues to prevent the level of integration required to meet the government’s wider strategic plans, let alone contribute to economic growth.  

The ill-fated fortune of the steel industry

The challenges facing the UK’s steel sector are real, and the global context of China’s overcapacity and its use of trade as a geopolitical instrument, warrants a coherent response. 

But the Steel Strategy has not delivered one. It has produced a package of measures that appear politically driven, economically underdeveloped and insufficiently tested against their wider consequences. 

This is not simply a steel problem. It is a problem with how the UK designs and delivers industrial policy. Time and time again, the Government produces siloed policies that fail to connect overarching priorities with clear economic objectives, or deliver in the interests of our national security and economic resilience.

The Steel Strategy should therefore serve as a lesson for future sector-focused interventions. 

Policymakers must develop a better understanding of entire value chains, engage meaningfully with all parts of industry and undertake rigorous assessments of potential unintended consequences before introducing major market interventions. What’s more, data-led decision making based on what is actually happening in the economy and accurately reflects the complex supply chains of our island trading nation, and not what the government of the day thinks is happening, is vital. 

These lessons will become increasingly important as the government turns its attention to other strategically important and foundational sectors, including aluminium, cement and chemicals. The risk is that the same mistakes are repeated. The opportunity is to learn from them.