The British Chambers of Commerce (BCC) on Thursday warned that planned cuts to Britain's steel import quotas and higher tariffs could disrupt supply chains and sharply increase costs for manufacturers.

In a letter to the government, the BCC said the proposed changes risk creating "real financial and logistics problems" for downstream industries, including construction, engineering and manufacturing, which rely on imported steel products unavailable from domestic suppliers.

Under the new regime due to take effect on July 1, Britain plans to reduce tariff-free steel import quotas by 60 percent overall, with some categories facing cuts of up to 90 percent. Tariffs on imports above quota limits are set to rise from 25 percent to 50 percent.

The BCC said the measures could create a "perfect storm" for firms already facing high costs and fragile supply chains.

Workers grind steel components at a workshop in Tengzhou City, east China's Shandong Province, Oct. 2, 2025. (Photo: Xinhua)

"The government rightly takes the protection of domestic steel production seriously," said William Bain, head of trade policy at the BCC. "But there is a serious risk of unintended consequences from its tariff and quota proposals, which could harm the UK's manufacturing base at a critical time," he said.

According to the BCC, some manufacturers could face millions of pounds in additional costs if quotas are exhausted, while others warned they may have to halt production because specialist steel grades are not produced domestically.

The business group also warned that firms could increasingly source steel from cheaper overseas suppliers, potentially undermining Britain's decarbonization goals and encouraging production to move abroad.

The BCC urged the government to reduce the scale of quota cuts, phase in higher tariffs more gradually, extend transitional arrangements for existing orders and publish a full assessment of the impact on downstream industries.