In a day of fast-moving events with hearings going on the impact of trade tariffs on Chinese products (this was originally set for three days but now it has been extended to seven days), information is emerging about tariffs being put on large diameter welded pipes from Canada, India and Turkey[1]. The United States (US) government claims that these countries are dumping this product.
A sub-battle in a larger battle against China?
These tariffs are being laid as a result of a memorandum that President Donald Trump signed on Apr 20, 2017, calling on Wilbur Ross, the Secretary of Commerce, to look into the effects of steel imports on US national security under Section 232 of the US Trade Expansion Act of 1962[2]…
The US Department of Commerce concluded its investigation on February 16, 2018 this and has determined the following[3]:
Key Findings of the Steel Report:
- The United States is the world’s largest importer of steel. Our imports are nearly four times our exports.
- Six basic oxygen furnaces and four electric furnaces have closed since 2000 and employment has dropped by 35% since 1998.
- World steelmaking capacity is 2.4 billion metric tons, up 127% from 2000, while steel demand grew at a slower rate.
- The recent global excess capacity is 700 million tons, almost 7 times the annual total of U.S. steel consumption. China is by far the largest producer and exporter of steel, and the largest source of excess steel capacity. Their excess capacity alone exceeds the total U.S. steel-making capacity.
- On an average month, China produces nearly as much steel as the U.S. does in a year. For certain types of steel, such as for electrical transformers, only one U.S. producer remains.
- As of February 15, 2018, the U.S. had 169 antidumping and countervailing duty orders in place on steel, of which 29 are against China, and there are 25 ongoing investigations.
Recommendations of the Steel Report:
- A global tariff of at least 24% on all steel imports from all countries, or
- A tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States, or
- A quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States.
As of today, the figure below shows the tariffs on Canada, China, India, and Turkey. These may go up when the 2017 quotas are reached…
References
[1] US puts tariffs on pipes from Canada, China, India and Turkey – Aug 21, 2018, ForexLive.com
[2] Section 232: Import Steel Tariffs Explained – United Pipe and Steel Corp.
[3] Section 232 Investigation on the Effect of Imports of Steel on US National Security – Commerce.gov
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