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 an economist and a former government adviser.

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China is trying to catch up with America on artificial intelligence. The Wall Street Journal has reported that Zhipu AI — one of China’s six “AI tiger” LLMs — has released a new model that can rival leading US systems, including Anthropic’s Mythos, in cybersecurity tasks such as pinpointing security bugs. While this marks a milestone in China’s drive to catch up with Western AI capabilities, strong performance on a single benchmark does not mean it has taken the lead. Chinese models still lag behind their Western counterparts in broader capabilities, such as autonomous operation. Skepticism is therefore warranted before resorting to hysterical conclusions, but complacency about the geopolitical implications of China’s AI advances would be an even greater mistake.

On the infrastructure side, Chinese AI is still constrained by access to advanced chips, with American labs way ahead in computing capacity as well as investment. Analysis from earlier this year suggests that Chinese models are likely to be at least a few months behind those in the US. But they are still continuing to make progress, or that the geopolitical importance of AI will be decided only by whose LLM has ventured deeper into the technological frontier. The practical applications of AI, countries’ to capture foreign markets, and the application of AI into the real economy will matter just as much.

Here, China may hold an advantage. As with its dominance across many critical supply chains, Beijing may not need to produce the most advanced AI systems — only those that are affordable and widely deployable. In doing so, it could consolidate global influence by supplying functional, low-cost AI at scale.

Beijing seems to be pursuing exactly that path, developing an AI “open-source” strategy that offers affordable, widely available AI models for companies and individuals to use and modify as they wish. The production of the DeepSeek AI model, which matched the performance of Silicon Valley tools such as ChatGPT at a fraction of the cost for users, created goodwill among Chinese models with developers.

The four most popular models on OpenRouter, an AI hardware platform for developers, are now all Chinese. The goal for China is not only to win the frontier-model race, but to make its systems the default layer of AI adoption across industries and global markets. For most economies, the choice is increasingly between an affordable tool they can deploy now and a more robust one that may be out of reach.

And while the countries adopting Chinese models may be exposed to political pressure and cyber threats from Beijing, safer and more capable alternatives matter little if they are unaffordable. American AI companies are already under pressure to monetize products whose operating costs are rising. If Chinese open-source models become the cheap default for startups, universities, governments and businesses across the developing world, then America’s AI lead will be eroded from below.

Perhaps more concerning for America in the long run is how AI can give Chinese manufacturing even more strength, through the ongoing integration of AI as a general-purpose technology. China’s new Five-Year Plan mentioned AI more than 50 times and includes an “AI+” action plan aimed at spreading AI across the economy.

Beijing has been pioneering automation of its critical infrastructure for years, with promising recent results in increasing warplane production capacity. In that regard, China’s open-model strategy and manufacturing dominance will reinforce each other. Cheap, adaptable models accelerate deployment across the real economy while those deployments generate real-world data and use cases that can feed back into further model improvement.

The United States should not dismiss the importance of its lead in the AI race. That lead worries Beijing, not least because a more automated Chinese economy would also become more vulnerable to AI-generated cyber threats. But nor should Washington assume that China cannot catch up with American capabilities over time.

This AI competition represents part of a broader struggle over tech supply chains and geopolitical influence. Decisions over whether to adopt US or Chinese models could produce a more fragmented global reality, with different regions relying on different cloud providers, chips and security structures. The result will likely be a global economy which is divided into competing spheres, rather than one which produces a single winner.

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Miquel Vila is a political and geopolitical risk consultant focusing on industrial strategy, critical infrastructure and global supply chains.

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