Caixin
Mar 02, 2018 05:53 PM
ECONOMY

Metal Industry Has Meltdown Over U.S. Tariffs

Steel is loaded onto a truck in a port in Lianyungang, Jiangsu province, in March 2017. The China Nonferrous Metals Industry Association said new U.S. tariffs on steel and aluminum will undermine the international trade order, leading to retaliation by its trading partners, including China. Photo: VCG
Steel is loaded onto a truck in a port in Lianyungang, Jiangsu province, in March 2017. The China Nonferrous Metals Industry Association said new U.S. tariffs on steel and aluminum will undermine the international trade order, leading to retaliation by its trading partners, including China. Photo: VCG

Several Chinese metal industry associations have lashed out against U.S. President Donald Trump’s plan to impose tariffs on two metals that the U.S. imports in large quantities from other countries, including China.

The China Iron and Steel Industry Association called the tariffs a “stupid trade protection measure” that will make the U.S. industry more vulnerable and less competitive, the official Securities Times reported. The China Nonferrous Metals Industry Association said U.S. tariffs will undermine the international trade order, leading to retaliation by its trading partners, including China.

Trump announced Thursday that his administration will impose a 25% tariff on imported steel and 10% tariff on imported aluminum, according to statement from the White House that recounted the president’s meeting with representatives from the steel and aluminum industries.

“Our steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world,” Trump said in his Twitter account, “We must not let our country, companies and workers be taken advantage of any longer.”

The announcement came as President Xi Jinping’s top economic aide, Liu He, was in the U.S. on a mission to calm tensions between the world’s two largest trading partners. Liu met on Thursday with U.S. trade and economic officials, but not with Trump, the Wall Street Journal reported, citing people familiar with the matter.

Marie Diron, managing director of Moody’s Investors Service, said in a note that the tariffs will have a “very small” direct economic effects in Asia, as exports of aluminum and steel to the U.S. typically amount to less than 1% of these countries’ gross domestic product and their total export volumes.

However, over the longer term, tariffs on steel and aluminum could signal a marked deterioration in global trade relations if they are followed by other measures from the U.S. and potential responses from other countries, she wrote.

Trade tensions between the U.S. and its major trading partners have increased under Trump, who says “unfair trade” practices by other countries have taken away American jobs.

In February, the U.S. Commerce Department recommended increasing tariffs on steel and aluminum imports due to concerns over “national security.” Both of the announced tariffs were higher than the minimums proposed by the Commerce Department, which recommended tariffs of at least 24% on steel and 7.7% on aluminum from all countries.

In January, Wang Hejun, head of the Ministry of Commerce’s Trade Remedy and Investigation Bureau, said China was extremely dissatisfied with the U.S. government’s decision to slap hefty tariffs on solar panel and washing-machine imports in a bid to aid U.S. manufacturers.

After the U.S. decision to increase the tariffs, Beijing launched anti-dumping and anti-subsidy investigations into U.S. sorghum exports to China.

The U.S. is the world largest importer of steel, buying the metal from more than 110 countries worldwide. China is the second-largest exporter of aluminum to the U.S., after Canada, but only the 11th-largest exporter of steel. The U.S., however, has accused China of dumping steel and thus lowering global steel prices.

Contact reporter Pan Che (chepan@caixin.com)

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