US quintuples tax on Chinese steel as commodity feud escalates

18 May 16

The US has slapped a 522% tax on Chinese steel after accusing the nation of distorting the market by flooding it with cheap product.


The move by the US Commerce Department marks an escalation in already heightened tensions between the two nations. China has said it will continue with controversial tax rebates to counter the tariffs and support its steel industry, which is the world’s largest.

Cheap Chinese steel has been a point of contention for both the US and the European Union, who argue that dumping by China – or massively undercutting competitors to shift its excess supply – is  distorting the market and damaging their native steel industries.

The US’s new tax will increase by fivefold the tariffs on Chinese-made cold-rolled flat steel, which is used in a range of industries including car manufacture and construction.

The American steel industry claims it has had to lay off 12,000 workers as a result of unfair competition from China.

Last year, major US steel producers filed a complaint to the International Trade Commission.

And following protests by steelworkers, the EU has launched an investigation into Chinese steel exports. In the UK, Tata Steel said cheap Chinese competition was a key factor in its decision to sell its British operations, putting the jobs of 20,000 at risk.

China, however, claims that it is not dumping its products overseas, but that its steelmakers are more efficient and their costs of production are far lower.

Reuters reports that the Chinese commerce ministry expressed “strong dissatisfaction” with the US ruling and said the US has adopted “many unfair methods” throughout the feud.

China has said it will slash annual production by 100-150 million tonnes annual production over the next five years.

However, observers note that its domestic industry, riddled with debt, can’t afford to abandon exports.

Just as they are in the US and EU, steelmakers in China have called for proactive support for their industry. 

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