The Biden administration has unveiled a series of new measures to try to protect the United States’ shipbuilding and steel industries from being eroded by Chinese overcapacity and non-market investments.
One of the measures is a newly-initiated investigation, under section 301 of the Trade Act, of China’s maritime, logistics and shipbuilding sectors. Another, still at the potential stage, would be a hike of the current 7.5% tariff rate on Chinese steel and aluminum imports.
These moves are contrary to the previous approach of US President Joe Biden, who had in 2018-2019 criticized then President Donald Trump for imposing an extra 25% tariff on Chinese manufacturing goods.
At that time, Trump accused China of having stolen millions of US jobs by manipulating its currency. Biden said then that extra tariffs would only cause losses for American farmers, manufacturers and consumers by making them pay more.
After he took office in January 2021, however, Biden did not cancel the additional tariffs.
‘Growing concerns’
“China’s overcapacity and non-market investments in the steel and aluminum industries mean high-quality US products have to compete with artificially low-priced alternatives produced with higher carbon emissions,” the Biden administration said in a statement published on Wednesday.
The administration said it recognizes growing concerns that unfair Chinese trade practices, including flooding the market with below-market-cost steel, are distorting the global shipbuilding market and eroding competition.
It said Biden is calling on US Trade Representative Katherine Tai to consider tripling the existing section 301 tariff rate on Chinese steel and aluminum, and is also directing his team to prevent China and other countries from evading tariffs on steel and aluminum that are imported from Mexico into the US.
Petition
On March 12, five national labor unions in the US complained in a petition that the US commercial shipbuilding sector has lost tens of thousands of jobs and more than 70% of its shipyards since 1975.
They said unfair trade practices of China, which is now the world’s largest shipbuilding nation, comprise the biggest obstacle to the recovery of the shipbuilding sector in the US.
They accused China of having invested the equivalent of hundreds of billions of dollars and adopted numerous supporting policies to boost its shipbuilding industry since the country joined the World Trade Organization in 2001.
“The US petition is full of false accusations,” a spokesperson of the Chinese Commerce Ministry said Thursday. “It misinterprets normal trade and investment activities as damaging to US national security and corporate interests and blames China for US industrial issues, lacking factual basis and running counter to common sense economics.”
He said China is strongly dissatisfied with and firmly opposes the newly-launched section 301 investigation. He said the US is making another mistake as the WTO has already determined that the Trump administration’s China tariffs violated its rules.
Xenophobic – who?
In February, Republican presidential candidate Donald Trump said he would impose additional tariffs on Chinese goods to more than 60% if he were to win the US election in November. Last month, he vowed to hit cars made in Mexico by Chinese companies with a 100% tariff.
Also, Biden has in recent months emphasized the negative impact of China’s industrial overcapacity on American job markets.
During a campaign activity in Pittsburgh, Pennsylvania on Wednesday, Biden told local steelworkers that his administration will increase tariffs on Chinese steel and aluminum.
He called China “xenophobic” as the country is “not importing anything.” He said China has an aging population and its economy has real problems.
“Are those words meant for China or the US itself?” Li Jin, a spokesperson of the Chinese Foreign Ministry, said in a regular media briefing on Thursday in response to Biden’s comments.
“We have been asking the US to seriously respect the principle of fair competition, observe WTO rules, and immediately lift all trade protectionist measures against China,” he said. “China will do what is necessary to safeguard its legitimate rights.”
According to the American Iron and Steel Institute (AISI), US steel makers imported 28.25 million tons of steel last year, down 8.7% from 2022.
The US imported 6.88 million tons of steel from Canada, 4.18 million tons from Mexico and 3.94 million tons from Brazil.
China’s exports of steel products grew by 36% to 90.3 million tons in 2023 from a year ago, according to the China Iron and Steel Association (CISA). Top destinations of Chinese steel are South Korea, Vietnam, Thailand, Indonesia and Turkey in 2022.
Direct exports of Chinese steel products to the US totaled 600,000 tons, only about 2.3% of total US steel imports of 25.6 million tons in 2023.
In 2022, China was the world’s largest exporter of aluminum and aluminum products with its exports valued at over US$42 billion, followed by Germany (US$21.1 billion) and the US (US$14.51 billion).
Last year, US imports of Chinese aluminum amounted to 200,000 tons, 3.7% of its total aluminum imports of 5.46 million tons.
“It’s ridiculous that Biden calls for raising tariffs for Chinese steel and aluminum while the US is sourcing the two metals mainly elsewhere,” a Shandong-based writer says in an article published on Thursday. “Biden only wants to gain support in the swing state of Pennsylvania.”
He says the focus of Biden’s latest comments is not about China, but, rather, the president’s decision to block Japan’s Nippon Steel from buying the Pittsburgh-based US Steel Corp.
Last December, Nippon proposed to buy US Steel Corp for US$15 billion. But the deal is still under an antitrust investigation launched by the US Justice Department.
Read: China blows off EU turbine probe as an ill wind
Follow Jeff Pao on Twitter at @jeffpao3
China should complain about US and EU overcapacity in aviation industry.
One country’s overcapacity is another way of being intimidated by the economic prowess of the country accused of overcapacity. Or, demonizing China is good for domestic politics.
Thinking in terms of production, distribution and exchange. Knowing the mantra of the Industrial Party in China:—“If you take care of production, the money will take care of itself.” Adding automated ports, shipbuilding and railways mania to the mix. China’s industrial exploits have become a doomsday machine to the finance economies of the West.
I am surprised the geniuses in the economics profession couldn’t see it coming. Too much believing in their own propaganda. Some of it is hilarious. China’s ageing population spelling doom is a good one. Not when they are riding hell for leather to automatic production and distribution it isn’t.
the only thing overcapacity here is the barrage of whining coming from the west wind