WASHINGTON DC — While Sir Keir Starmer spent the weekend using his emergency powers to ensure Parliament backed his plan to stop British Steel from falling victim to “sabotage” at the hands of his Chinese owners, in the United States, Donald Trump was taking his own steps to safeguard America’s domestic production of the critical alloy.
Despite strains in the trans-Atlantic relationship between London and Washington, the two leaders found themselves simultaneously battening down the hatches to protect their respective steel industries.
Trump on Sunday sought to drive a further stake into the heart of Japanese attempts to buy US Steel, telling reporters aboard Air Force One that he does not want the company to “go to Japan”, comments that appeared to derail ongoing attempts by Nippon Steel to acquire the American behemoth.
Despite Tokyo’s alliance with Washington, his effort to block the sale is aligned with his planned revitalisation of manufacturing industries in the American heartland.
He argues America’s reliance on imported steel and aluminium is antithetical to US national security, even when supplies are coming across the northern border from Canada, a traditional US ally.
Trump’s determination to make China the major target of his international trade war suggests that Washington may look kindly on Downing Street’s efforts to end Beijing’s dominance in the UK steel industry.
Starmer argues his decision to “save British Steel” is in the UK’s national interest, amid reports that the government concluded the company’s Chinese owner planned to scuttle its Scunthorpe plant in an act of economic “sabotage”.
The diplomatic row with Beijing comes as Starmer’s Government eyes China as a key part of its economic growth plans (Photo: Ian Forsyth/Getty Images)That claim alone will have garnered Washington’s attention, and Trump will certainly not object to the Chinese parent company being given a black eye as a result of Starmer’s process.
But the moves may also lead to fresh US scrutiny of the extent of Chinese involvement in Britain’s economy and its critical infrastructure.
During the Biden era, former Prime Minister Rishi Sunak agreed to address national security risks associated with bilateral trade flows between the UK and China.
The so-called “Atlantic Declaration” signed in June 2023, aimed to address “the national security risks posed by certain kinds of outbound investment” by UK firms in China in a bid to limit the risk of “fuelling technological advances that will enhance the military and intelligence capabilities of countries of concern”.
In 2020, after coming under American pressure, Britain banned Chinese tech giant Huawei from any involvement in the UK’s development of 5G infrastructure.
But China still enjoys considerable investments in key pieces of the UK economy, with Chinese firms boasting a 10% stake in Heathrow Airport, a 10.5% stake in National Grid’s gas distribution network and an 8.7% stake in beleaguered Thames Water.
In 2023, accountancy firm Grant Thornton estimated that 970 companies in the UK are effectively Chinese-owned, creating more than 59,000 jobs and revenues of more than £116bn.
The report argued that Chinese companies “contributed strongly to the economic rebound following the Covid-19 pandemic”, and made a “vast contribution” to the UK’s economy.
Even after Chinese management of British Steel is sidelined, it remains unclear whether Business Secretary Jonathan Reynolds can win fresh exemptions for UK steel exports to America as part of ongoing negotiations aimed at securing a new economic co-operation pact with Trump’s government.
One model for that kind of agreement was forged in March 2022, when the Biden administration struck a deal with Prime Minister Rishi Sunak to allow tariff-free access to the American market for British Steel.
The thorny issue of Chinese involvement in the industry required the government in London to allow an independent, third-party audit of British Steel to attest to “no evidence of market-distorting practices” as a result of any kind of Chinese influence over the company.
Today, with Trump’s trade war against China in full cry, everything has changed.
The White House may welcome Number 10’s rebuke of British Steel’s Chinese owner, but seek moves to limit Beijing’s involvement in other critical areas of the economy.
And the president’s aversion to all steel imports – even those from Canada and Mexico – may still keep American barriers in place, stopping the product that emerges from Scunthorpe’s blast furnaces from ever being exported to the USA.
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