An unexpected Trump ripple: Britain nationalizes its last steel mill Developments at the Scunthorpe Steelworks are showing how quickly the global economic order is shifting under trade, security and financial pressures. Yesterday at 3:00 a.m. EDT
But Britain has seized control of the factory once again, through a rare emergency vote by Parliament last week. Scunthorpe now finds itself at the center of the latest global trade clashes, squeezed by tariff turmoil, the fading fortunes of globalization and a growing dilemma faced by European economies: whether to court China, or be wary of it.
The government said it hopes the takeover is temporary and is looking for commercial partners to invest in the plant. But for now, Scunthorpe is being run by Business Secretary Jonathan Reynolds, who has personally overseen the rush delivery of raw materials to keep the mill operating and 2,700 workers on the job.
The strange developments — with even conservatives and business leaders applauding the effective nationalization of a key facility — show how quickly the economic order, in Britain and beyond, is shifting under trade, security and financial pressures.
Britain had already taken a step, many say a leap, back from global integration when it pulled out of the European Union in 2020. It has, like the United States, moved aggressively to restrict both legal and illegal immigration.
Now, as President Donald Trump shakes up settled trade and security relationships, Britain is one of many countries no longer so sure about where to look for stable alliances and safe investors.
“You see countries becoming more inward-looking and more nationally oriented,” said Michael Kitson, a professor at Cambridge University’s Judge Business School. “That’s partly to do with the election of Trump, but also concerns about foreign ownership, foreign workers.”
Kitson compares the British move to concerns in the United States about a proposed merger of U.S. Steel with Japan’s Nippon Steel. The deal was blocked by the Biden administration over national security concerns but is being possibly reconsidered by Trump, who has ordered a second national security review.
The dramatic turn of events in Britain is a mark of several converging economic trends, experts said.
The plant, owned by British Steel, has been in financial straits for years because of soaring energy costs and competition from cheaper overseas producers. Jingye Group, British Steel’s Chinese parent company, had been in negotiations with unions and the government about possible bailout programs.
Then came the new Trump administration. The president’s pivot toward Russia and hints that the United States could pull back from NATO have sparked a race to boost military self-sufficiency across Europe. Suddenly, preserving domestic steel production became more of a national security priority.
Next, Trump’s worldwide tariff campaign upended decades of free-trade norms. His 25 percent levy on steel exported to the United States “couldn’t come at a worse time for the U.K. steel industry,” the head of Britain’s steel trade association said at the time.
The British government’s talks with Jingye faltered. The company, which said it was losing more than $900,000 a day at Scunthorpe, demanded more in government subsidies. It told workers it was planning to shut down one of the plant’s blast furnaces, called Queen Bess, by early May, and the second, Queen Anne, possibly a few weeks later, according to Alun Davies, national secretary for steel and metals at the Community Trade Union, who participated in the talks.
Days later, the company canceled orders for the coked coal and iron ore needed to keep the furnaces burning, materials that take weeks to arrive.
“When we asked the company to commit to buying raw materials, they refused,” Davies said. “That tells you there was no intention to keep the furnaces going.”
Even in ideal circumstances, shutting down and restarting a blast furnace is complex and costly. Abruptly starving one of fuel can be disastrous, causing it to cool too fast and potentially destroying its massive shell. Davies and numerous other critics accused the company of essentially trying to wreck Britain’s last virgin-steel mill.
“I did say this to the owners, ‘I believe you are actively trying to shut down our industry,’” Davies said. “That can’t happen.”
Jingye did not respond to a request for comment.
Business leaders, normally loath to advocate nationalizing industries, urged the government to act. Prime Minister Keir Starmer called the first emergency weekend session of Parliament in decades. Members quickly approved the takeover legislation, which included protections for plant employees who defied any orders from the owners to shut down the furnaces.
“Given global economic instability, it is crucial that manufacturing is protected at home,” the prime minister’s office said in a statement before the vote.
The first order of business was securing raw materials to keep the furnaces burning. Government officials were at the plant within hours and shipments of coked coal were dispatched from a nearby port. The plant is operating normally now, Davies said, with no immediate danger of the furnaces cooling off.
But the episode is far from over. The government said it is seeking new investors and working on plans to convert the plant to electricity. And it is still willing to negotiate compensation with its former owners, officials said.
Still, the takeover has created a diplomatic rift between London and Beijing, with the Chinese bristling at Jingye’s being shouldered aside.
“We hope that the British government will treat Chinese companies investing and operating in the U.K. in a fair and just manner, protect their legitimate rights and interests, and refrain from turning economic and trade cooperation into political and security issues,” said a Chinese Embassy spokesman in London.
Prime Minister Keir Starmer speaks during a visit to meet steelworkers in Appleby Village Hall near Scunthorpe on April 12. (Peter Byrne/WPA Pool/Getty Images)
But avoiding the political and security aspects of Chinese investment is only going to get more difficult. With Washington and Beijing locked in an escalating trade war, European governments are caught in a bind. They worry that China will dump many of the cheap products barred from the U.S., including steel, onto their markets.
At the same time, with the U.S. erecting more and higher import barriers, trade ministers are exploring deeper ties with China. Starmer has sought more Chinese investment and made improved relations with Beijing a priority.
But numerous politicians have called for more scrutiny of Chinese ownership of British firms, especially when it comes to strategic industries such as steel, telecommunications and food.
Had Jingye taken Scunthorpe offline, critics point out, Britain would have become the only Group of Seven industrialized country without its own plant to make virgin steel.
Reynolds, during the emergency session of Parliament, accused the Chinese firm of trying to “irrevocably and unilaterally close down primary steel making at British Steel.”
“I think we have got to be clear about what is the sort of sector where actually we can promote and cooperate [with China] and ones, frankly, where we can’t,” Reynolds said in a Sky News interview. “I wouldn’t personally bring a Chinese company into our steel sector.”
The Scunthorpe affair signals changes along multiple macroeconomic trend lines, according to Kitson, the Cambridge professor, including free trade, privatization and globalization.
Critics may now be more likely to press for further unwinding of the privatization that occurred under Prime Minister Margaret Thatcher’s conservative government in the 1980s, such as in the beleaguered water and rail sectors. Economic nationalism will be on the rise. Foreign investment will get more scrutiny. How far governments will turn inward, and what effects that could have on the global economy, remain unclear.
“There’s a concern that we’re seeing policies that rhyme with the 1930s: more protectionism, more anti-immigrant rhetoric, fear of foreign ownership,” Kitson said. “At times like this, you blame others for your economic ills.”
Britain’s largest steel trade association applauded the takeover of Scunthorpe, saying government intervention was needed to protect a key factory, at least for now.
“Nationalization is certainly not our go-to solution,” said Jon Harrison, the regulatory affairs manager at U.K. Steel. “But I do think it represents a dawning realization of the need for a domestic steel industry that hasn’t been there for a while.”
As to how far the trend could go, Harrison declined to say.
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