On Wednesday 17 April 2024, President Biden called on the U.S. Trade Representative (USTR), to triple the tariff rate on Chinese steel and aluminium imports. The current average tariff on Chinese imports under Section 301, on certain steel and aluminium products, is 7.5%. However, to get around these increased tariffs, China has started to trade its products with Mexico, which then imports it into the U.S.
The White House released a comprehensive fact sheet outlining the Biden-Harris Administration’s bold initiatives to protect and revitalise the American steel and shipbuilding sectors in the face of unfair practices from China. The main changes to be imposed are the following:
Protecting American Steel: President Biden recognizes the critical role of steel in both the economy and national security. American-made steel is fundamental to infrastructure, transportation, and clean energy initiatives. To counter the impact of Chinese steel imports, the Administration is proposing to triple the tariff rate on steel and aluminum imports from China.
Investments in Manufacturing: Unlike previous administrations, President Biden is spearheading significant investments in American manufacturing. The Bipartisan Infrastructure Law, CHIPS and Science Act, and Inflation Reduction Act are driving private-sector investments, creating jobs, and boosting manufacturing capacity.
Addressing Unfair Competition: China’s unfair trade practices, including flooding the market with underpriced steel and aluminium, threaten American industries. President Biden’s Department of Commerce is actively imposing anti-dumping and countervailing duties on steel-related imports to ensure fair competition.
Collaboration with Mexico: Recognising the challenge of tariff evasion, the Administration is collaborating with Mexico to prevent the influx of Chinese steel and aluminium through Mexican imports into the United States.
Investigation into Chinese Trade Practices: The United States Trade Representative is launching an investigation into China’s unfair trade practices in the shipbuilding, maritime, and logistics sectors. This move follows a petition filed by five unions, highlighting China’s aggressive interventions in these industries.
Preserving American Ownership: President Biden emphasised the importance of maintaining domestic ownership of iconic American companies like U.S. Steel. The Administration aims to ensure U.S. Steel remains an American-owned and operated entity.
Investments in Clean Steel Production: The Biden-Harris Administration is committed to green steel production, investing in projects to lower emissions from energy-intensive industries. These initiatives will support the economic recovery of steel communities and position the U.S. steel industry as a global leader in low-carbon steel products.
While the Biden-Harris Administration’s initiatives signal a proactive stance in protecting American industries, the situation remains volatile to potential repercussions of escalating trade tensions with China.
A bad example
It’s not disputed that China behaves poorly in its export markets, but America’s reaction is will do nothing to resolve the problem and a lot to exacerbate it. The WTO is there to deal with exactly these sorts of problems, but instead of using the WTO, the US has done its level best to wreck it. The result are bilateral trade wars, which are cannot be won and which can persist for a very long time. President Biden had an opportunity to walk back some of the more offensive policies put in place by his predecessor, but instead of doing that he has simply added to the problem.
More subsidies to counter China’s subsidies. The winners of subsidy wars are the last to run out of money. For small economies like South Africa, this does not bode well at all.