The US President Donald Trump launched an investigation against China and its exporters of cheap steel in the US market, raising the possibility of imposing new duties. This has increased the stock price of some US steelmakers by more than 8%. Citing concerns about national security, Trump announced his decision at a ceremony at the White House, together with executives from the steel industry and trade minister Wilbur Ross, a billionaire businessman who has accumulated a part of his state precisely from investing in the steel business.
“Steel is critical to both our economy and our army”, Trump said. “This is not an area in which we can afford to depend on other countries”, added the US President.
Trump has won many voices in industrialized states like Michigan and Pennsylvania with his promise to raise production and impose measures against Chinese commercial practices. China is the largest steel producer country and makes much more steel than it uses, selling the surplus outside, thus undercutting the prices of local producers.
The unusual move to launch an investigation comes at a time when Trump presses China to make more efforts to hold back North Korea’s ever more belligerent. When Chinese President visited Trump earlier this month, the US president presented the opportunity to use trade as an opportunity to persuade China to take more action on the issue.
The decision to initiate an investigation is in response to Chinese steel exports to the US, which is now forming 26% of the US market.
Chinese exports have grown despite China’s continued claims of lowering its steel capacity. If the trade ministry’s investigation finds that the US steel industry suffers from too high imports, it would recommend punitive measures that may include duties. Departing from the Obama administration’s approach to the issue largely relying on appeals to the World Trade Organization, Trump ordered an investigation under such a law that allowed him to impose restrictions on imports, citing national security.
In October 2001, an investigation by the Ministry of Trade found no evidence that imports of iron ore and semi-finished steel pose a threat to US national security.