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Trump Trade War - Having no effect on China steel sector - Mercatus Centre report

Steel News - Published on Fri, 15 Feb 2019

Image Source: mercatus.org
South China Morning Post reported that the trade war between the United States and China is having no effect on the Chinese steel sector, which is being propped up by surging domestic demand. New research by US analysts shows that Chinese steel producers are enjoying more exemptions from US President Donald Trump’s tariffs on steel than those from US allies Canada, South Korea, Spain and the United Kingdom. The new study by Christine McDaniel, a trade economist at the Mercatus Centre at the George Mason University in Virginia, shows that requests made to exclude Chinese steel products from tariffs have had a 39% approval rating as compared to 38% for Japan, Canada 27%, UK 30%, South Korea 8%, Spain 6%.

Ms McDaniel said “This is having a negative impact on US manufacturing, the base of the economy Trump has promised to resuscitate. Part of the blame lies with the US steel industry itself, which is making objections to tariff exclusion requests made by US manufacturers, on the grounds that they can provide the same product for roughly the same price, even if it has been proven that they cannot. She said “Out of the 60,000 exclusion requests that have been filed, only one has been accepted that’s had an objection from a US steel company. The other thousands that have been objected have either been denied or still pending. For US manufacturers, whether your request is denied or pending, it’s essentially the same thing: you don’t have access to the tariff free product. There are so many cases where the US manufacturer will file an exclusion request, then the steelmaker files an objection saying they can make it. The manufacturer files a rebuttal saying that they have documents saying that they have requested the US steelmaker to make that type of product in the past, and they could not do it. You have a situation where US steelmakers are deciding who pays tariffs. If they say they can make it for you, you’re out of luck, even if they can’t.”

Paul Bartholomew, senior managing editor at S&P Global, said that “Most of China’s steel exemptions have come in higher products, made by producers such as Baosteel, who can compete in terms of quality with Japanese and South Korean producers. Last year when the tariffs first came in, the steel market reacted negatively in China. It’s very sentiment driven, tends to be reactionary to policy announcements. But it returned to fundamentals within a few days. For the first three quarters, the market was very strong and robust, demand was very robust. Steel tariffs, the so-called trade war, wasn’t a huge factor. It was playing out in sentiment, but domestic demand was strong enough to save the steel industry.”

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Posted By : Ratan Singh on Fri, 15 Feb 2019
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