Steel Tariffs - What a Trade Deal Could Mean for UK Construction

Steel procurement trends are shifting, with contractors suggesting shorter price-holding periods and increased market uncertainty driven by global pressures. In this update, we explore the drivers behind this — including the US-imposed tariffs — and assess the short- and medium-term impacts on steel supply, pricing stability, and project delivery. We also outline the potential implications of the UK–US trade agreement and what it could mean for cost certainty and future demand across the construction sector.

What have we noticed?

We have noticed a recent trend in procurement, whereby main contractors are suggesting that some steelwork sub-contractors are only prepared to hold prices for 4-weeks.

Why do we think this is?

This is likely due to the recent volatility in the steel market, caused by the US tariffs being imposed on steel imports worldwide.

What have been the short-term effects?

As a result of the imposed tariffs:

• Global steel prices rose due to uncertainty and retaliatory trade measures.
• Supply chains were disrupted, making it harder or more expensive to source steel from international markets.
• Delays and uncertainty in sourcing materials impacted project timelines. Many contractors stated they could only commit to 4-week fixed price periods within tender returns.
• Larger steelwork contractors appear to be focused around the logistic sector, away from others, in order to maintain production and orders books. Short term this should provide a benefit to our sector.

What are the likely medium-term effects?

If UK producers of steel reduce output due to lost export revenue, there is a risk that supply may tighten, rising prices over time.

However, if UK steel becomes less competitive in the US market, reducing exports, then this can lead to a surplus of steel in the UK, especially from domestic producers who were exporting to the US.

As a result, steel prices in the UK may fall due to oversupply, which could benefit UK construction companies in the medium term.

What impact would the US – UK Trade Agreement likely have?

On the 8^th of May 2025, a landmark trade agreement between the US and UK promised to deliver the following:

• Tariffs on UK steel and aluminium exports to the US will be removed, boosting UK manufacturers and potentially lowering costs for construction firms.
• Improved market access: UK producers should face fewer barriers in exporting to the US, which could stabilise or reduce domestic prices due to increased production volumes.

Although this would reduce the benefits of the oversupply of steel, there are likely to be several positive ripple effects on the UK’s industrial and logistics construction sector:

1. Steel Cost and Supply Stability

• Steel is a major component in warehouse construction, especially for structural frames, roofing, and cladding.
• The removal of the 25% US tariff on UK steel exports should allow UK producers to operate at higher volumes and with more predictable demand.
• This should stabilise steel prices in the short term, easing cost pressures. In the long term, this may lead to UK steel producers scaling up production, potentially reducing domestic steel prices.

2. Programme Certainty

• With fewer supply chain disruptions and more certain pricing, construction programmes should return to a point of predictability, allowing developers to plan and execute projects more efficiently.

3. Boost to Domestic Manufacturing and Logistics Demand

• The trade deal may stimulate UK manufacturing, increasing demand for logistics and industrial space.
• As UK manufacturers regain competitiveness, they may expand operations, requiring new or upgraded facilities.

4. Competitive Advantage in Global Logistics

• UK-based logistics developers may benefit from more competitive build costs compared to EU counterparts who could still face tighter steel supply constraints.
• This could attract foreign investment into UK logistics infrastructure, especially near ports and transport hubs.

Positive Industry Outlook

The UK construction sector is optimistic, anticipating better pricing, more predictable supply chains, and renewed investment – now is a great opportunity to get a scheme to market and the team at Goodrich is expertly placed to assist.

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