The UK Government will not be responding to Donald Trump’s tariffs on steel and aluminium imports with its own levies — at least for the time being. Though the US President’s inclusion of Britain in his measures will undoubtedly damage the sector and its employees, avoiding retaliatory tariffs on goods entering the UK is the sensible thing to do, not least because such a response would expose how Britain has damaged its own steel industry from within.

One of the key benefits of Brexit is that it has allowed the UK to set its own trade policy. The European Union has this week announced “firm and proportionate counter-measures” against the Trump tariffs, but the UK has an opportunity to chart its own course and avoid a self-destructive trade war. Reciprocal tariffs on steel and aluminium from the US would drive up costs for the many British businesses which rely on these goods to make their own products. Besides hitting their profits, this would exacerbate the cost-of-living crisis as these additional costs are passed onto consumers in the form of higher prices.

With steel in particular, the Government has lurched from crisis to crisis and has found itself on the back foot rather than putting effective solutions in place. For example, the main problem facing the steel sector and advanced manufacturing is high energy costs. Energy is prohibitively expensive for the steel producers, not least because of the frantic push to Net Zero which has levied onerous taxes and regulations to drive up prices. What’s more, the UK has failed to boost supplies by building enough sources of energy generation — including nuclear reactors — which would lower prices for steel producers. The UK is an international outlier in this respect, and risks falling behind competitors such as France.

If the UK is to have a viable steel industry without resorting to protectionism — which would risk invoking the wrath of the US and making us all poorer — then the Government needs to act. It should urgently lower the high cost of the energy prices currently crippling the UK steel industry. In the short term, this will involve lowering the plethora of taxes and abolishing the many regulations relating to energy generation. In the long term, it will require massively increasing supply by fast-tracking planning permission for the construction of new nuclear reactors and being prepared to take on those who would oppose it. As such, it is welcome that the current government has announced its intention to do so.

The UK steel industry is in decline, and Trump’s tariffs will only exacerbate matters. However, this decline need not be terminal. Rather than following the EU’s example by retaliating, the UK should work with the US to get the tariffs removed and work at making energy more affordable by cutting regulations and boosting supply. If the Labour government holds firm and avoids mimicking Brussels, the UK steel industry might still have a future.

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Ben Ramanauskas is a senior fellow in economics at Policy Exchange and a former adviser to the UK Government.

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