…and now the Obama administration is going for a total ban on Chinese steel. Anyone paying attention to what could happen instead of what’s already happening is either ignorant or playing politics.
Donald Trump’s threats to hit China with protectionist tariffs of up to 45% on the goods it ships to the US go down well with his supporters on the campaign trail, despite ruffling feathers among free marketeers within his own party. Experts and commentators are less impressed, suggesting The Donald’s proposed trade war could cost US jobs and potentially trigger a global downturn.
What Trump and his opponents fail to acknowledge, however, is that the US is already engaged in a vicious trade battle with China centered on steel exports. China’s overproduction has decimated steel producers all over the world after the country upped its output from 128 million tons in 2000 to 822 million tons in 2014. American steel makers have already lost billions of dollars as a result of China dumping its steel exports on the US economy, while their counterparts in countries from Brazil to Britain have been left facing bankruptcy. Unsurprisingly, American and European steel mills are pushing their governments to take action.
China mills defiant
So far, party bosses have been unable to stem the tide of steel producers. Mills in Hebei province have repeatedly flouted orders from Beijing to slash their output, while new power plants meant to support increased levels of production popped up in the region. The reason? While the Central Committee does exact a level of control over the biggest SOEs, many small or mid-sized local producers have sprouted up as a result of the advantageous crediting conditions China’s 2008-2009 stimulus package contained. These companies have increased their share of the steel market, growing from 55% in 2012 to 66% in 2015.
And it’s not just the US. In February, thousands of steel workers held a protest in Brussels, calling on the European Union to protect them against cheap imports from China, which they claim are destroying European jobs. The European Parliament reacted promptly and passed a resolution that dealt a deathblow to hopes Beijing would receive Market Economy Status later this year. The much-coveted designation would have eased the access of Chinese exports to the European bloc, and China threatened a trade war with the EU if MES is not awarded.
…With its economy slowing, China is unlikely to kill the subsidies that allow its commodity producers to turn out products at below-market prices, making an escalation of its trade war with the US and the continued destruction of its environment all but inevitable.
Full article: The trade war with China is already here (Asia Times)