U.S. under Trump Series: Strict recommendations by Wilbur Ross on metal imports might spark trade war

Last Friday, the U.S. Commerce Department in consultation with the White House released the reports and recommendations presented to President Trump by the Commerce Secretary Wilbur Ross earlier this year. The reports reveal harsh trade recommendation made by Secretary Ross. The reports were created in response to President Trump’s request to review whether excess imports of metal hurt U.S. national security.

Here are the key points from the Steel report,

• World steelmaking capacity is 2.4 billion metric tons, up 127 percent from 2000, while steel demand grew at a slower rate. The recent global excess capacity is 700 million tons, almost 7 times the annual total of U.S. steel consumption.
• The reports points to China as the largest producer and exporter of steel, and the largest source of excess steel capacity. Their excess capacity alone exceeds the total U.S. steel-making capacity.
• On an average month, China produces nearly as much steel as the U.S. does in a year. For certain types of steel, such as for electrical transformers, only one U.S. producer remains.
• As of February 15, 2018, the U.S. had 169 antidumping and countervailing duty orders in place on steel, of which 29 are against China, and there are 25 ongoing investigations.
   

Secretary Ross has three alternate recommendations,

• A global tariff of at least 24 percent on all steel imports from all countries, or
• A tariff of at least 53 percent on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100 percent of their 2017 exports to the United States, or
• A quota on all steel products from all countries equal to 63 percent of each country’s 2017 exports to the United States.

Mr. Ross’s recommendation for Aluminum is equally strict,

• A tariff of at least 7.7% on all aluminum exports from all countries, or
• A tariff of 23.6% on all products from China, Hong Kong, Russia, Venezuela and Vietnam. All the other countries would be subject to quotas equal to 100% of their 2017 exports to the United States, or
• A quota on all imports from all countries equal to a maximum of 86.7% of their 2017 exports to the United States.

President Trump is likely to take up actions based on recommendation by Mr. Ross and maintain his promise of strict actions on trade to revive American manufacturing.  

After the release of the reports, China criticized the move and threatened possible retaliation. Wang Hejun, an official at China’s commerce ministry said, “The spectrum of national security is very broad and without a clear definition it could easily be abused….If the final decision from the US hurts China’s interests, we will certainly take necessary measures to protect our legitimate rights”.