Speaking to steelworkers in Pittsburgh on Wednesday, Biden called for higher tariffs on Chinese steel and aluminum as part of a series of U.S. measures to prop up the U.S. steel industry, including the president's pledge that Japan's Nippon Steel Corp. Nippon Steel would not succeed in acquiring Pittsburgh-based U.S. Steel. As part of an ongoing review, the United States will impose new tariffs of 25 percent on certain Chinese steel and aluminum products (now 7.5 percent), while his administration will launch a formal investigation into China's shipbuilding industry.
On April 17, U.S. time, the Office of the U.S. Trade Representative announced the launch of a Section 301 investigation against China's maritime, logistics and shipbuilding industries. According to the so-called "Fact Sheet" published on the White House website, the United States has announced that it will take new "historic actions" to protect the U.S. steel and shipbuilding industries from China's "unfair practices." The first is a call on the Office of the U.S. Trade Representative (USTR) to consider "tripling" the current Section 301 tariffs on Chinese steel and aluminum products.
In this regard, a spokesman for the Ministry of Commerce of China said on the evening of the 17th that China is strongly dissatisfied with this and resolutely opposes it. The previous US administration launched a Section 301 investigation on China and imposed tariffs on China, which was ruled by the WTO to be in violation of WTO rules and opposed by many WTO members. The US has made repeated mistakes in launching a new Section 301 investigation out of domestic political needs. We urge the US to respect facts and multilateral rules, immediately stop its erroneous practices and return to the rules-based multilateral trading system. China will closely follow the progress of the investigation and will take all necessary measures to resolutely defend its rights and interests.
A Section 301 investigation is an investigation conducted by the United States under Section 301. Section 301 refers to Section 301 of the U.S. Trade Act of 1974, which protects the rights of the United States in international trade and retaliates against other countries that are deemed to have "unreasonable" or "unfair" trade practices. Under this provision, the United States can investigate the trade practices of other countries that it considers to be "unfair", and may consult with the governments of the countries concerned, and finally the President decides to take retaliatory measures such as raising tariffs, restricting imports, and terminating the relevant agreements. During his tenure, former U.S. President Donald Trump used Section 301 of the Trade Act of 1974 to impose punitive tariffs on hundreds of billions of dollars worth of Chinese imports in 2018.
U.S. Trade Representative Katherine Tai claimed at a congressional hearing on the 16th that over the years, China's uncontrolled non-market policies and practices have destroyed many labor communities and industries in the United States, including steel, aluminum, solar panels, electric vehicles and critical minerals. "We are ready to use our trade tools in this effort, including through the new Section 301 actions and our four-year review of China's Section 301 tariffs," she said.
It is understood that the measures to be taken by the US Government this time are as follows:
1. Call on the USTR to consider tripling the existing Section 301 tariff rates on Chinese steel and aluminum. Under Article 301, the average tariff on certain steel and aluminum products is currently 7.5%.
2. The U.S. Department of Commerce has imposed more than 30 anti-dumping and countervailing duties on steel-related products. The U.S. Department of Commerce has also conducted nearly 27 investigations into anticompetitive behavior by Chinese exporters and circumvention of trade rules by countries such as China.
3. The Biden administration is directing his senior team to work with Mexico to prevent steel exports from China and other countries from entering the U.S. market and circumventing Section 232 or Section 301 tariffs.
4. The U.S. Trade Representative is investigating China's unfair trade practices in shipbuilding, shipping, and logistics.
5. The Biden administration, committed to maintaining a strong U.S. steel company backed by U.S. steelworkers, rejected U.S. Steel. Steel) to be acquired by Japan's Nippon Steel.
6. Increase investment in U.S.-made steel manufacturing. The U.S. government recently passed the Bipartisan Infrastructure Act and the Inflation Reduction Act, announcing up to $1.5 billion in funding for six clean steel projects.
From the perspective of mainland exports, if the United States increases the tariff rate on steel and aluminum, it may have an adverse impact on aluminum exports, but the impact on steel exports may be relatively limited. In 2023, the mainland will export 90.26 million tons of steel, mainly to 10 countries including India, the United Arab Emirates, Brazil, Vietnam, and Turkey, accounting for about 54% of the mainland's total steel exports. Among them, 845,100 tons of steel were exported to the United States, accounting for about 0.94% of the mainland's steel exports, and the export value was about 1.677 billion US dollars, accounting for about 1.98% of the mainland's steel exports. Although the price of steel in the U.S. market has been more than twice that of the domestic market in recent years, the amount of steel products that the mainland can actually export to the U.S. every year is very limited under the restrictions of high import tariffs and import quotas in the United States.
In terms of aluminum, 690,900 tons of aluminum products will be exported to the United States in 2023, accounting for about 8.14% of the mainland's aluminum product exports, and the export value will be about 3.794 billion US dollars, accounting for about 10.87% of the mainland's aluminum product export value. If the United States raises tariffs, it may suppress the export demand for aluminum from the mainland.
At this stage, the U.S. tariffs are still at the proposed level, and there is still uncertainty about whether they will be implemented in the future, and it is recommended to continue to observe the impact on related industries.
In 2022, the China Iron and Steel Association and the China Nonferrous Metals Industry Association issued a statement on the WTO's ruling that the US steel and aluminum Section 232 tariffs violated WTO rules, saying that China's steel and aluminum industries have always been the core goal of meeting domestic demand and achieving high-quality development. The trade and cooperation between the industries of the two countries is based on the strong complementarity of the steel and aluminum industries of China and the United States, and is completely based on the principle of fair marketization, which not only does not cause damage to the United States, but also benefits downstream customers and plays a role in promoting the development of related fields in the United States. China's steel and aluminum industries have been phasing out outdated production capacity since 2010, and since 2016, they have implemented supply-side structural reforms to significantly reduce steel and electrolytic aluminum production capacity. Up to now, China's steel and aluminum industry has been strictly controlling new production capacity, and at the same time setting a capacity ceiling, the reform has achieved remarkable results, and has effectively promoted the healthy and sustainable development of the world's steel and aluminum industry.
Information reference: Bloomberg, Compliance Guanlan, Metallurgical Information Network, etc.
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