UK officials are optimistic that the Trump administration will soon agree to modify the domestic-production requirements that are holding up a trade agreement to lower US tariffs on British steel.

The UK has asked that steel imported from European countries such as the Netherlands — and then manufactured into products in the UK — qualify as British for the purposes of US tariffs, according to people with knowledge of the negotiations. That would mean products made by Tata Steel UK, which no longer has its own furnace and must rely on raw steel from elsewhere, could be exported to the US tariff-free.

Negotiators for the UK said US counterparts are amenable to such an exemption as long as steel from countries that are seen by President Donald Trump as strategic rivals aren’t covered under the UK deal, one person said. An agreement could come soon, they added.

Finalizing that deal would be a boost for Prime Minister Keir Starmer, who is under pressure as the UK economy slows.

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The trade agreement with the US that was announced May was initially seen as a win for Starmer by promising to save the UK from the steep tariffs Trump was threatening to impose on other countries around the world. Starmer was the first — and still one of the few — leaders to reach such a pact with Trump, who said he would cut tariffs on UK steel and cars in return for an increase in the quota of beef and ethanol that the US can export to the UK tariff-free.

But the terms of trade on steel have yet to be finalized and Starmer came under criticism last month for giving the US what it had asked for without guaranteeing that tariffs on steel were slashed to zero. Instead, they have remained at 25 percent while avoiding the rise to a 50 percent rate faced by other countries.

The stumbling block has been the US’s insistence that steel must be melted and poured in the UK to count as British for tariff purposes — a requirement which Tata UK, one of the country’s biggest producers, can no longer meet after closing down its blast furnace last year. Jonathan Reynolds, the UK’s business and trade secretary, said he was keen for a deal that all manufacturers could benefit from.

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Tata UK’s new electric arc furnace is not due to be up and running until late 2027. The business is currently importing large amounts of steel from its sister companies in India and the Netherlands but believes it could fulfill most US orders if its products made from Dutch steel qualified for tariff-free treatment.

The White House didn’t respond to a request for comment on Wednesday. Speaking to reporters on Tuesday, Trump said he expected to “refine” his trade deal with the UK during a state visit in September.

The UK’s backup plan would be to increase production at British Steel, another major producer that runs the country’s last remaining blast furnace. That steel could then be sold to Tata UK for further manufacturing.

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Even so, British Steel would not likely be able to supply the correct types of metal to cover all of Tata’s US exports, including the packaging-grade steel used in products such as Heinz beans tins.

British Steel was taken under government control earlier this year from its Chinese owner Jingye Group, which had threatened to shut down the loss-making company’s furnaces.  

One official with knowledge of the UK’s plans said the government’s negotiating team had been working around the clock to finalize its agreement with the US. However the US team had been distracted by its negotiations with other countries, the person said, leading to delays.

A spokesperson for Tata Steel said the company welcomed “the progress the UK Government is making with the USA administration, in what is clearly a dynamic situation.”

Peter Brennan, director of trade and economic policy at industry group UK Steel, said the US decision to impose tariffs on UK steel “ultimately harms American businesses that rely on these products.”

“A swift agreement with zero-rate tariffs is in the clear interest of both the UK and the US,” he said.