Contractors are preparing for renewed cost pressures following the Government’s introduction of a more interventionist steel strategy aimed at reducing reliance on imports and strengthening domestic production.
Ministers have outlined plans to cut steel import quotas by 60% from July and apply a 50% tariff on volumes exceeding those limits. The measures are intended to protect UK producers, but are expected to have immediate consequences for the construction supply chain.
Alongside the trade restrictions, the strategy sets a target for UK steelmakers to supply up to 50% of domestic demand, compared with roughly 30% at present. This ambition is supported by up to £2.5bn in investment.
While the policy is being framed as essential for national security and long-term infrastructure resilience, contractors and steel specialists warn that it will increase costs across the industry.
Jonathan Clemens, chief executive of the British Constructional Steelwork Association, said: “For all the rhetoric about sovereign capability and backing British industry, this strategy will make essential products more expensive for the downstream businesses that actually turn steel into buildings, bridges and infrastructure.
“The result will be higher costs across construction, including projects commissioned by the government itself.”
The concerns come at a time when many contractors are already operating on tight margins and managing ongoing volatility in material prices.
The Government maintains that imports will still play a role and says quota levels have been calibrated to preserve supply. However, the scale of the reductions, combined with the proposed tariff regime, is widely expected to constrain availability and push prices upwards, particularly for specialist steel products not currently manufactured at scale in the UK.
The strategy also confirms electric arc furnaces as the preferred direction for UK steelmaking, accelerating the transition towards recycled, lower-carbon production methods. It further seeks to prioritise the use of domestically produced steel in key growth sectors such as offshore wind and major infrastructure programmes.
This shift presents a particular challenge for large-scale projects, including the Lower Thames Crossing, where procurement requirements set by National Highways call for low embodied carbon structural steel that is not yet readily available from UK producers.
