China has warned that proposed tariffs by the U.S. on imported aluminum and steel are groundless and it reserves its right to retaliate if the tariffs are imposed.
On Friday, the Commerce Department unveiled recommendations that are not consistent with what is factual said the Ministry of Commerce in China in statement posted by its chief of trade investigation and remedy Wang Hejun.
U.S. Secretary of Commerce Wilbur Ross said that the U.S. might impose quotas aluminum and steel imports, including one for a minimum of 24% on steel products coming from all countries.
This is the strongest indication to date that U.S. President Donald Trump’s White House administration is ready to move forward with its protectionist agenda. Secretary Ross said it would be surprising to them if those measures were to be challenged.
According to Wang, the U.S. already has excessive protections for its steel and iron products. If the decision in the end impacts the interests of China, we will take the necessary measures to protect are rights, added Wang.
Trump has been pushed by companies as well as steelworkers unions in the U.S. to move forward with his promises of protecting the industry. Trade partners with China have complained for many years that its industry is an unfair benefactor of subsidies by the state, and dumps products at prices that are below the market.
While China only represents approximately 1% of the steel imports into the U.S., it could challenge the action taken by the U.S. with the World Trade Organization, but that would take years to resolve.
China has been for a long time at the epicenter of the world’s over-production of steel. However, trade dynamics have been shifting as exports of aluminum are taking center stage.
Last month, China increased its shipments of aluminum for the third straight month, as its supplies domestically spill overseas.
However, still cargoes dropped to their lowest points in close to five years due to domestic growth grabbing production and from curbs to cut capacity for environmental reasons.
Rather than placing tariffs on all the imports, Trump might opt for another approach, suggested Ross during a meeting this week with Capitol Hill lawmakers.
For example, with steel Trump could go with the option recommended that would place a 53% tariff on imports entering from 12 countries, a list which includes countries like South Korea, China and Russia, but allow exemptions for their allies such as Canada, Germany and Japan.