1 October 2026
Executive Summary
A group of 28 major economies has agreed to work towards stronger measures addressing global excess steel-production capacity, creating another potential trade-policy risk for manufacturers and steel-consuming businesses.
The agreement emerged alongside this week’s G20 trade discussions in the United States.
The countries involved are considering additional measures, potentially including tariffs, aimed particularly at steel originating from economies considered to have substantial excess production capacity.
China rejects Western claims that its industrial policies have created harmful excess capacity and argues that such measures amount to protectionism.
No new universal tariff has yet been implemented under the initiative.
For manufacturers, the risk is that measures intended to protect domestic steel producers can simultaneously increase input costs for businesses that consume steel.
UK Impact
Potentially exposed sectors include:
- Automotive.
- Construction.
- Engineering.
- Machinery.
- Energy infrastructure.
- Defence.
- Packaging.
- Transport equipment.
Businesses should identify the country of origin of steel contained within components rather than looking solely at where the finished component was manufactured.
Global Impact
Trade policy is increasingly being used to address industrial overcapacity.
That can cause:
- Trade diversion.
- Higher tariffs.
- Supplier switching.
- Regional price differences.
- Customs complexity.
- Increased documentation.
- Changes in manufacturing location.
Measures in one market can also redirect steel into another market, potentially prompting further defensive trade measures.
Our View
Businesses should map material origin below the level of their immediate supplier.
Companies should ask:
- Where was the steel manufactured?
- Where was it melted and poured?
- Where was the component manufactured?
- Could origin rules change?
- Are tariffs already applicable?
- Could additional measures be introduced?
- Who contractually bears tariffs?
- Can suppliers change origin?
- Are alternative grades qualified?
- Could trade diversion reduce prices elsewhere?
- Are customers protected against input-cost increases?
- Are long-term contracts indexed?
The commercial risk is not confined to companies importing raw steel.
A business may buy a finished component domestically while the steel inside that component originates from a jurisdiction subsequently affected by trade restrictions.
Knowing where your supplier is located is not necessarily the same as knowing where your supply originates.
Risk Indicator: ELEVATED – GLOBAL, STEEL TRADE & MANUFACTURING SUPPLY CHAINS
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The information contained within these Market Alerts is provided for general market awareness and informational purposes only. It does not constitute financial, legal, investment, regulatory or insurance advice. Whilst every effort has been made to ensure accuracy at the time of publication using multiple reputable and independently verified sources, geopolitical events, legislation, regulation and market conditions may change rapidly. Readers should obtain appropriate professional advice before acting upon any information contained herein.
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