Contractors are bracing for a fresh wave of cost inflation after the Government unveiled a hardline steel strategy designed to curb imports and boost domestic production.

Ministers have set out plans to cut steel import quotas by 60% from July and impose a 50% tariff on material brought in above those limits — a move aimed at shielding UK producers but set to ripple through the construction supply chain.

The strategy also sets a target for UK steel to meet up to 50% of domestic demand, up from around 30% today, backed by up to £2.5bn of investment support.

While the policy is being pitched as critical for national security and infrastructure resilience, contractors and fabricators say it risks pushing up the cost of building projects across the board.

Jonathan Clemens, chief executive of the British Constructional Steelwork Association, said: “For all the rhetoric about sovereign capability and backing British industry, this strategy will make essential products more expensive for the downstream businesses that actually turn steel into buildings, bridges and infrastructure.

“The result will be higher costs across construction, including projects commissioned by the government itself.”

The warning comes as many contractors are already dealing with tight margins and volatile material pricing.

The Government insists imports will continue and quotas have been designed to maintain supply.

But the scale of the cut — combined with steep tariffs — is expected to tighten availability and drive prices higher, particularly for specialist products not widely made in the UK.

The strategy confirms electric arc furnaces as the future of UK steelmaking, accelerating the shift to recycled, lower-carbon production.

It also aims to embed UK steel into major sectors including offshore wind and infrastructure.

The policy throws up a tough challenge for big infrastructure projects like the Lower Thames Crossing where National Highways procurement chiefs are demanding that low embodied carbon structural steel is used, which cannot presently be sourced in the UK.