HS2 firm says new steel tariffs will ‘exacerbate’ cost pressures for UK construction industry

The UK government's decision to double tariffs on imported steel and reduce import quotas by 60% will increase cost pressures on the construction industry, particularly affecting major infrastructure projects like HS2. Contractors building HS2, including Mace, warn these measures will exacerbate rising costs amid an ongoing energy price shock caused by the Iran conflict. From July, duties outside quotas will rise to 50%, increasing steel prices significantly. Industry leaders such as Mark Reynolds of Mace and Milda Manomaityte of the Association for Consultancy and Engineering highlight the adverse impact of tariffs on public infrastructure projects, including railways, bridges, and tram lines. Despite these concerns, tariffs aim to protect domestic steelmakers like Tata and British Steel, safeguarding approximately 10,000 jobs and preventing the potential collapse of the UK's primary steel sector. HS2 Ltd reports that UK steel content in the railway's construction was already over 50% in 2023-24 and expected to rise to two-thirds in 2024-25, with much steel procurement completed ahead to mitigate further price rises. The government prioritizes opening HS2 quickly and affordably amid rising inflation and project delays, with transport secretary Heidi Alexander exploring cost-saving measures such as reducing train speeds. Market risks include further cost overruns, delayed completion past the 2033 target, and potential disruption to steel supply chains due to tariff impacts.