Biden Administration Takes Steps to Close Loopholes for Chinese Steel Imports
In an effort to prevent China from evading tariffs by exporting steel and aluminum to the United States through Mexico, the Biden administration has announced plans to close loopholes in trade agreements. These loopholes have allowed China to take advantage of duty-free benefits by melting and pouring steel in Mexico before exporting it to the US. To address this issue, President Biden will sign a proclamation ensuring that steel coming from Mexico only receives duty-free benefits if it remains in Mexico for processing. Importers will also be required to provide information on the origin of their steel products.
The concern over Chinese steel imports stems from the fact that 13% of steel arriving in the US from Mexico is melted or poured outside of North America. Lael Brainard, the director of the National Economic Council, stated that these actions will fix a major loophole that China has been exploiting to avoid US tariffs. Brainard emphasized that China is simply too big to play by its own rules, highlighting the need for stricter regulations.
Canada has also taken steps to prevent Chinese steel and aluminum from entering its market. The Canadian government confirmed that it will not serve as a “back door” for these imports and will use its robust trade-remedy system to prevent dumped and subsidized imports. This move aligns Canada’s efforts with those of the US in protecting domestic industries and workers from unfair trade practices.
President Biden has been vocal about the impact of cheap Chinese exports on the US steel industry. He has referred to China as not competing but rather cheating in the global market. In response, his administration has implemented higher tariffs on Chinese imports, including aluminum and steel. Former President Trump has expressed support for these actions, questioning why it took so long for higher levies to be imposed on China.
Democratic lawmakers, such as Pennsylvania Senators John Fetterman and Bob Casey, have urged President Biden to protect American steel from China’s unfair trade practices. They emphasized the importance of maintaining tariffs or increasing them where necessary to ensure a level playing field for American workers.
China is the world’s largest steel producer, accounting for over 50% of global steel output. The Chinese steel industry benefits from significant subsidies, allowing for the accelerated export of steel at artificially low prices. In the first quarter of 2024, China’s net exports of finished and semi-finished steel increased by 35% compared to the previous year. Chinese steel production has also rebounded, with a 2.7% year-over-year increase in May.
While China supplies only 4% of the steel in the US, the Biden administration is taking a forward-looking approach to address this issue. Their goal is to prevent the importation of cheap, carbon-intensive steel that undermines American businesses and workers. This move comes at a time when steel prices have slumped due to excess supply from the COVID-19 pandemic and slowing construction activity. The administration’s actions aim to protect domestic industries and ensure a fair and sustainable steel market in the US.
