The UK steel trade measure: how you can allocate risk and protect your financial position in construction contracts

The UK’s new steel trade measure (the Measure) came into force on 1 July 2026 and is already beginning to influence construction contract negotiations.

The Measure limits the volume of certain steel products that can be imported into the UK tariff-free each quarter. Once the relevant quota is reached, a tariff of 50% applies to the value of imported goods falling within the affected product categories. UK’s steel trade measure from 1 July 2026 – GOV.UK

The Measure forms part of the Government’s wider strategy to support the domestic steel industry and protect UK steel production from the effects of global overcapacity.

If your project relies on imported steel, the implications could be significant. Quota volumes are allocated on a first-come, first-served basis nationwide, meaning that whether a tariff applies to your project may depend on broader market activity outside your control. That creates a level of pricing uncertainty that many construction contracts are not designed to address.

Why does this matter for construction projects?

Steel remains a critical component of many infrastructure, industrial and commercial developments. Whilst the Measure is there to strengthen domestic supply chains, it also introduces a new layer of pricing uncertainty.

Unlike a straightforward increase in import duties, the challenge for the construction industry is that the tariff may or may not apply depending on when steel is procured and whether the relevant quota has already been exhausted by the UK wide market at the time of procurement.

For contractors, the Measure creates the risk of significant additional procurement costs that may not have been factored into contract pricing. For employers, it may lead to higher contract sums as contractors seek to price the risk of future tariff exposure from the start.

The impact is not limited to cost. If you delay procurement until the next quota period or look to find alternative products, there may also be consequences for programme, material availability and wider supply chain arrangements.

How can parties protect themselves?

The most effective way to manage tariff risk is to address it clearly during contract negotiations rather than relying on standard form provisions after the event.

Most standard form construction contracts were not drafted with quota-based trade measures of this nature in mind. Whilst you may look to change in law provisions, fluctuation clauses or compensation event mechanisms, those provisions may not provide the certainty you need where tariff exposure depends on future market activity.

That can leave both employers and contractors exposed to uncertainty around cost and programme, increasing the likelihood of disputes if a tariff becomes payable during the project.

We therefore recommend thinking about bespoke contractual provisions that specifically address tariff risk before procurement takes place. Depending on your project, that may include:

• Clearly allocating tariff risk to either the employer or the contractor;
• Agreeing a cost-sharing system where tariff costs go beyond a defined threshold;
• Imposing obligations on contractors to mitigate tariff-related costs; and
• Creating a clear process for dealing with tariff exposure if it happens during the project.

We’re also seeing employers and contractors use bespoke tariff management mechanisms that give a practical route forward where a steel order falls outside the available quota. For example, if a contractor is ready to place a steel order and finds that the relevant quota has been exhausted, the employer may choose to:

1. go ahead with the procurement and pay the additional tariff cost through an adjustment to the contract sum; or
2. delay procurement until the next quota period, with the contractor receiving appropriate programme relief (e.g extension of time and, where agreed, loss and expense).

This approach does not remove the impact of the Measure, but it does provide certainty. Rather than creating a dispute over who should bear the risk, it gives all parties an agreed process for dealing with the issue if and when it arises.

With clear drafting, employers keep commercial control over budgets and contractors gain greater clarity around their entitlement to additional time and cost.

If your project is likely to rely on imported steel, now is the time to consider whether similar protections should be included in your construction contracts. Addressing the issue early is likely to be far more effective than trying to resolve it once tariff costs apply.

The UK’s steel trade measure is creating a new category of commercial risk for projects that rely on imported steel. While the long-term impact of the Measure remains to be seen, uncertainty around pricing and procurement is already influencing contract negotiations.

If your project relies on imported steel, now is the time to assess your exposure, review your procurement strategy and consider whether your contracts adequately allocate tariff risk.

Our Construction & Engineering team can help you take practical steps now to prepare for the Measure by identifying potential areas of exposure, reviewing procurement strategies and implementing bespoke contractual protections that allocate risk clearly and provide a practical route forward if tariff costs arise.