China “Clamps Down” on Its Excess Steel. We Aren’t Holding Our Breath.

Elizabeth Brotherton-Bunch

Elizabeth Brotherton-Bunch Digital Media Director, Alliance for American Manufacturing

Commerce Dept. will hold hearing on Section 232 investigation; more trade EOs may be coming.

Well, look at that.

Reuters reports that China has revoked the licenses of 29 Chinese steel firms, part of “its campaign to tackle overcapacity in the sector.” Most of the companies have already stopped making steel, but some had “illegally expanded production or violated state closure orders.”

Beijing also announced that 40 additional steel companies have been asked to make environmental protection and safety measures. One analyst said this might be part of an effort to gradually shutter inefficient mills rather than force closures.

All of this, of course, comes just four days after President Trump signed an executive order officially launching a Section 232 investigation into foreign steel imports. Led by the Commerce Department, that investigation will determine whether dumped steel imports pose a threat to national security — and could lead to tariffs or other action in response.

I know what you’re thinking —Trump’s action is already working!


Not so fast.


The one thing you need to remember about China is that it plays the long game.

For years now, the United States and other nations have been pressuring China to tackle its massive steel overcapacity. China knows it has a big problem, and has pledged to do something about it. Repeatedly.

And repeatedly, China has broken its promises and then pledged to do better.

China makes a massive amount of steel — its overcapacity in 2015 alone was 336 million metric tons. Seventy-five percent of the world’s new steel stock since 2000 has come from China. Revoking the licenses of a handful of companies, most of whom aren’t making steel anymore anyway, isn’t going to solve this global crisis anytime soon.

It's also worth noting that China Daily trotted out the usual talking points against U.S. action on Monday, including that this is a “bilateral and multilateral” problem and could lead to “retaliatory actions.” It’s the sort of response that we’ve heard from China before, part of an effort to distract everyone from its own responsibility.

And it’s been going on for years. Meanwhile, the global steel imports crisis worsens and China's steel output has even increased.

Will the Section 232 investigation be a gamechanger? Only time will tell, of course — but as AAM President Scott Paul noted last week, the investigation “sends a strong signal to Beijing that our government will pursue sensible trade actions that will push back against persistent unfair trade practices.”

There is movement in the investigation, by the way. Politico Pro reported that the Commerce Department will hold a hearing on May 24 as part of the investigation, and will accept written comments through May 31.

Meanwhile, Axios reports that the White House is looking at unveiling “as many as three additional executive orders this week” on trade issues, including a potential Section 232 investigation looking at aluminum imports.


Reposted from AAM.