By Alan Stewart, partner at MHA, the accountancy and business advisory firm

The UK Government’s ambition to increase domestic steel usage is understandable, particularly in the context of supply chain resilience and supporting UK industry.

However, from a Scottish perspective, the implications are more complex. Scotland is not a major steel producer but is a significant user of steel across energy, defence, infrastructure and construction. As a result, any tightening of import quotas or increase in tariffs is likely to feed directly into project costs.

A 50% tariff on steel imported above quota levels represents a material cost pressure at a time when many capital-intensive projects are already being carefully managed. There is a risk that additional cost burdens will not be absorbed within supply chains but passed through to developers, contractors and ultimately end users.

There is also a practical consideration around availability. Not all steel required for major projects is readily sourced within the UK in the volumes or specifications needed. In those cases, imported steel is not a choice, but a requirement. That creates a tension between policy ambition and commercial reality.

There is also a broader question around consistency of approach.

The measures announced for the steel sector represent a clear and direct form of support for domestic production. Equally, it raises questions in the context of other strategically important sectors, such as domestic energy production, which are operating under more constrained conditions and facing the prospect of rising costs that may impact investment decisions.

For Scotland in particular, where significant investment is planned across energy and infrastructure, the key question is how these measures interact with project viability. Higher input costs, combined with existing pressures around labour, financing and delivery timelines, could influence the pace and scale of development.

The focus, therefore, should not only be on increasing domestic production, but on ensuring that policy changes do not inadvertently constrain sectors that rely on steel as a critical input.

Alan Stewart is a tax partner at MHA, based in Aberdeen, advising clients across a range of sectors including energy. MHA is the UK member firm of Baker Tilly International, a global network of accountancy and advisory firms. The firm has offices in Edinburgh and Aberdeen.