China need not wait until Donald Trump takes office to experience protectionist pushback against its export policy. Today, the European Union issued a new round of anti-dumping duties on Chinese metal products. The Wall Street Journal explains:
The European Union on Monday leveled fresh provisional anti-dumping tariffs on Chinese steel and iron products as part of the bloc’s bid to protect European steelmakers harmed by overcapacity.
The duties range between 43.5% and 81.1% and apply to seamless pipes and tubes of iron and steel, which are used in power plants, in construction as well as the oil-and-gas industry.
The duties come as European manufacturers have raised numerous complaints alleging that their Chinese competitors are exporting some steel products to Europe at unfairly low prices. The tariffs announced Monday are the latest in a string of anti-dumping measures against Chinese steel.
Trump may grab all the headlines with his calls for new U.S. tariffs on Chinese goods, but the truth is that Beijing’s trade problem is already here. With its latest duties, the European Union is starting to catch up to the United States, which imposed 266 percent duties on some Chinese steel products earlier this year. The EU’s measures are effective for six months, at which point the European Commission will decide whether to extend them for five years.
The new duties were not unforeseen. For months, Western countries have accused China of dumping its excess steel in international markets at artificially low prices. China has denied the practice, but it braced for impact this past week as the European Union moved toward the new duties, and opposition from a UK-led minority collapsed. The new policy comes as a deadline looms for China to finally achieve “market economy status” by the World Trade Organization, a designation that would make it more difficult to bring anti-dumping cases against Beijing.
Meanwhile, though Trump advisers are downplaying his threats of a trade war with China, the new President-elect is not likely to back down entirely on a key platform of his campaign. And if U.S. Steel wins a favorable decision in the landmark complaint against Chinese steelmakers that it filed this year, imports of Chinese steel could be banned outright.
China is not likely to take this sitting down, raising the prospect of retaliatory measures against the United States or Europe. The latest duties levied by the European Union may have been intended as warning shots to induce a change in Chinese behavior, but depending on the Chinese reaction, those shots could very well backfire.