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China promises “strong” response to US steel tariffs

09 Mar 2018 09:09 GMT
China promises "strong" response to US steel tariffs

Singapore, 9 March (Argus) — China will take "strong" measures to defend its interests in response to US President Donald Trump's decision to impose tariffs on steel and aluminium imports, the commerce ministry said today.

"China urges the US to respect the authority of the multilateral trading system and to withdraw measures as soon as possible," said Wang Hejun, head of the ministry's trade remedy and investigation bureau.

Trump yesterday signed a measure that would levy a 25pc tariff on steel and 10pc tariff on aluminium imports starting from 23 March, after a Section 232 investigation found the imports were a threat to national security. Canada and Mexico will initially be exempted.

"The steel that the US imports is used mainly in products meant for civilian use, which makes their justification of protecting US national security irrelevant. The misuse of the ‘national security exception' clause by the United States destroys the multilateral international trade order espoused by the WTO, and China will firmly oppose it," Wang said.

The China iron and steel association (Cisa) said the tariffs will harm the global steel industry and US steel consumers, which will see operating costs increase as a result.

"Cisa calls on the Chinese government to take a resolute response against imports of US stainless steel, galvanized sheet, coal, agricultural products as well as consumer electronics," Cisa said. China's nonferrous metals industry association (CNIA) also called for retaliatory tariffs, on imports of aluminium scrap, coal, agricultural products and luxury consumer goods from the US.

China imported 2.82mn t of coking coal from the US in 2017, up from zero in 2016. Deliveries from the US made up 4pc of China's total coking coal imports of 69.9mn t last year.

China's steel industry has been a major target of President Trump's push to protect US industries, but the steel tariffs may have the biggest impact on other countries including Brazil, South Korea and Japan. China accounted for only 2pc of the 34mn t of steel imported by the US in 2017, but the Trump administration said this does not reflect Chinese steel arriving via other countries.

China's steel capacity surplus and output growth are also cited as obstacles for global markets. China's steel output increased by 6pc to 832mn t in 2017, or around half of global production. China has roughly 1bn t/yr of crude steel capacity.

US-China trade talks are moving beyond steel to the US trade deficit with China. Washington has asked China to develop a plan to reduce its trade surplus.

"We are negotiating now with China, in a midst of a big negotiation. I do not know if anything is going to come of that," Trump said yesterday. "They have been very helpful. President Xi [Jinping] I have a lot of respect for." But the trade deficit with China is far more than $500bn/yr if intellectual property is included and the US is going to reduce it "one way or another," he said.