(Bloomberg) -- The UK has quietly shelved its talks with the US aimed at eliminating tariffs on British steel, in a blow to the industry which has been waiting months for the removal of the 25% levy.
As President Donald Trump heads to the UK for a state visit, Prime Minister Keir Starmer has punted negotiations on removing US steel tariffs, according to a person familiar with the matter.
In return, Starmer has accepted commitments from the US administration that tariffs on steel will remain at 25% -- less than the 50% slapped on other countries' exports, but still a level which UK companies have said is damaging.
The strategic decision comes even as Trump signaled he was open to some concessions to the UK on trade to help ease implementation of their tariff deal as he departed the White House for a trip to London on Tuesday.
"They want to see if they can refine the trade deal a little bit," Trump told reporters at the White House as he prepared to leave for a second state visit. "We've made a deal, and it's a great deal, and I'm into helping them."
Negotiators from the UK will continue talks with their US peers to ax steel tariffs over time, the person with knowledge of the government's thinking said. However, the commitment reached between officials ahead of Trump's arrival in London will be a disappointment to businesses who had hoped the visit would finalize an earlier agreement promising the removal of tariffs on UK steel.
Under a trade deal hammered out between the two countries in May, Trump pledged the removal of tariffs on steel imports from Britain. But while other elements of the agreement have come into force, the commitment on steel proved problematic.
At the heart of the disagreement is a US insistence that steel must be "melted and poured" in the UK to be able to take advantage of the tariff exemptions, a requirement which Tata Steel UK, one of the country's largest steel producers, can no longer fulfill after closing its last blast furnace last year.
"On 8 May the Prime Minister claimed credit for negotiating steel tariffs to zero. Now it turns out that was untrue and it's actually 25%," said Andrew Griffith, business and trade spokesperson for the Conservatives. "Either his maths or his relationship with the truth clearly needs some work."
The person familiar said the commitment to keep steel tariffs at 25% would provide clarity to the industry, and would still make the UK competitive given tariffs on other countries' exports are double the amount.
Trump's visit comes at an awkward time for Starmer, with the president touching down just days after the prime minister was forced to sack US ambassador Peter Mandelson following a Bloomberg investigation into Mandelson's relationship with pedophile Jeffrey Epstein. Trump is also facing scrutiny over his own relationship with the disgraced billionaire.