And Beijing is not happy about it.
The Department of Commerce on Tuesday announced very big duties on Chinese-made cold-rolled flat steel – 522 percent worth of duties, in fact. That’s a lot of duties. And the Chinese government is not happy about it. We’re walking in “strongly dissatisfied” territory here.
Commerce’s ruling is the result of a 2015 case filed by a number of American steelmakers, U.S. Steel among them. That company is separately pushing for a ban on Chinese steel imports, as it alleges that state-sponsored Chinese hackers dug around its computers a few years ago to steal industrial secrets.
Truth is, this massive hike of import duties won’t affect much, as the product it targets doesn’t make up much of the steel that China exports to the United States.
What’s notable is the climate in which this is taking place. The American presidential race is chock full of tough rhetoric targeting trade with China (paging Mr Trump). And the world – lead by the American steel industry — is getting cranky at China over the huge overcapacity issue in its steel sector. The Financial Times notes:
Chinese steel capacity has soared in the past decade to more than 1bn tonnes, sending surplus production flooding into international markets especially after domestic consumption peaked in 2013. Beijing routinely calls on the sector to cut capacity but at the same time it is unwilling to allow the failure of large mills, especially those of state-owned groups that are often the biggest employers, taxpayers and borrowers in their locality.
Yet while Beijing “calls on the sector” to close unneeded mills, it simultaneously is pushing tax rebates to steel exporters.
Do any of the Chinese government’s actions suggest that it presides over a market economy? Bueller?