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How do we face the US tariff increase?

Trwy admin Mewn Celf, Newyddion Postiwyd 2018-11-01

In 2018, international trade entered a period of trade protectionism.

In January, the U.S. government decided to impose high protective tariffs on imports of solar panels and washing machines, and in February, the U.S. Department of Commerce finally decided to impose high anti-dumping and countervailing duties on imports of Chinese aluminum foil.In early March Trump announced a 25% tariff on imported steel and a 10% tariff on aluminium, throwing a blockbuster bomb on international trade and global financial markets.

What is the impact of the US steel and aluminum trade war on China?

Although China is the world's largest steel producer, accounting for nearly half of the world's total steel output, but the direct export of steel to the United States is very small. In 2017, the export of finished steel products is less than 1 million tons, accounting for about 3.2% of the total U.S. steel imports, semi-finished exports are not large, and the U.S. Market exports steel products in China. The proportion is also decreasing.

But China may end up offering American consumers more steel products through global value chains than direct exports. For example, 60% of South Korea's steel imports come from China, and 12% of its steel exports to the United States, so if the United States imposes high tariffs on steel imports from South Korea, it will inevitably affect South Korea's steel imports from China. In order to maintain the global production chain, China should actively oppose unilateralism protectionism in the US.

How can chinese manufactures respond?

The high tariffs imposed by the United States on the steel and aluminium industry have little direct impact on China, but through global value chains and possible trade retaliation by other countries, as well as China's largest steel producer, the negative impact of the incident on China's steel and aluminium industry can not be underestimated.

In the face of global overcapacity and rising trade friction, the Chinese government will continue to emphasize capacity, especially for strip steel produced by low-quality small businesses. The rebound in metal prices will cover up the state of excess capacity, and make all kinds of strip steel production capacity resurgence, the government will inevitably stand firm to steel production capacity, or in the next few years due to trade wars led to a decline in demand for steel exports,the problem of overcapacity will become more prominent.

Trump's plan to impose high tariffs on steel and aluminium, and to take "no difference" treatment regardless of exemption from any country, has already sparked national discontent and is likely to trigger retaliation by the EU and other steel and aluminium exporters. When negotiating trade retaliation with other countries, China should adopt "different" and targeted opposition to U.S. unilateralism, avoid the expansion of trade war to hurt itself, and exert pressure on Trump through the U.S. steel and aluminum consumption industry, forcing the United States to give up tariff protection on steel and aluminum as soon as possible.

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