June 11, 2018

Issue Spotlight: How China Circumvents U.S. Metals Tariffs

As readers of Connecting the Dots know, the United States has imposed tariffs totaling 25 percent on steel products and 10 percent on aluminum products for materials from most countries, including China. In its comments submitted to the U.S. Commerce Department last year when the Trump administration was studying steel and aluminum imports and their impact on national security, the Metals Service Center Institute recommended that the administration focus on countries, like China, that routinely circumvent international trade law and that are responsible for the global excess supply of steel and aluminum.

That advice remains important since, according to news reports, China has worked around other metals’ tariffs and also has the capacity to work around the current Section 232 tariffs. Last week, The Wall Street Journal reported:

“Chinese steelmakers have been buying and building plants overseas, fueled by tens of billions of dollars from Chinese state-owned lenders and funds. By owning production abroad, Chinese steelmakers aim to gain largely unfettered access to global markets. Their factories back in China are constrained by steep tariffs imposed by the U.S. and numerous other countries—largely before President Donald Trump took office—to stop Chinese steelmakers from dumping excess production onto world markets. But their factories outside China face few so-called antidumping tariffs.”

In its testimony, MSCI urged the Trump administration to focus on circumvention. We will continue to make this argument.