mead berger shevtsova garfinkle michta grygiel blankenhorn bayles
All in the Timing
China Signals New Steel Cuts

President Trump issued a major trade challenge on Friday, announcing a national security investigation into steel imports that could lead to sweeping new tariffs on Chinese steel. Today, as if on cue, Beijing announced new measures to rein in the excesses of its steel industry. Reuters:

Twenty-nine Chinese steel firms have had their licenses revoked as Beijing kept up its campaign to tackle overcapacity in the sector and days after U.S. President Donald Trump said he would open a probe into cheap steel exports from China and elsewhere.

Analysts say the revocations were unlikely to be a direct response to Trump’s plan, but rather a part of China’s reform measures aimed at reducing surplus steel capacity that many estimate at around 300 million tonnes, about three times Japan’s annual output. […]

China’s Ministry of Industry and Information Technology released a list on Monday of 29 firms that will be removed from its official register of steel enterprises. Most have already stopped producing steel, but some had illegally expanded production or violated state closure orders.

On the one hand, Reuters is right to acknowledge that Beijing’s move should not be considered a significant giveaway to Trump: the Chinese were already planning new measures to reduce overcapacity, and they have a history of cheating on their commitments anyway. And China’s official state publications are hardly in a conciliatory mood, instead denouncing Trump’s steel probe as a unilateral, protectionist move that could trigger a trade war.

Still, the timing here seems to be no coincidence. As we wrote about China’s rejection of North Korean coal on the same day as the Mar-a-Lago summit, this appears to be a well-timed goodwill gesture, reflecting the Chinese calculation that it can defuse tensions by offering Trump low-cost symbolic victories that he can claim credit for. And they may not be entirely wrong. In his recent freewheeling interview with the Associated Press, Trump was eager to tout China’s coal ban as proof that he made Xi cooperate on North Korea:

“Look, he turned down many coal ships. These massive coal ships are coming where they get a lot of their income. They’re coming into China and they’re being turned away. That’s never happened before. […] People have said they’ve never seen this ever before in China.”

It remains to be seen whether Trump can be so easily mollified on his signature trade issue, whether a few well-timed announcements about long-planned steel cuts will allow Trump to save face and reconsider punitive tariffs. But China appears to believe that Trump is desperate for symbolic victories for public consumption, and that half-measures may soften his stances on both trade and North Korea.

Your move, Mr. President.

Features Icon
show comments
  • Fat_Man

    The Tom Friedman fantasy about China is that the word goes forth from Beijing and all of the frogs hop. It will be interesting to see if this order has any more effect than the last dozen.

  • Suzy Dixon

    Oh boy. Now we are truly going to find out if Trump’s business instincts are real or not, and if he’s listening to those he should be (Peter Navarro and a lesser extent Steve Bannon) on these issues. This is like a case study from business school. Same thing was done to Bush. He instituted a hike in steel tariffs to counter over-importing. However, no one noticed that the Chinese had actually cut production and thus reducing imports in 2001-2002. Why? Because the Bush tariff was ruled to be in non-compliance with WTO regulations simply due to that one year of slightly reduced imports, and therefore technically didn’t meet the requisite justification of raising tariffs only in case of an import surge.

    • Jim__L

      So… why does anyone pay attention to WTO again?

    • RedWell

      Sure, maybe. Or Trump is getting played: He tends to focus on immediate, tangible victories, so China is handing him the illusion of such victories.

      • Suzy Dixon

        Well he hasn’t been played yet, but if he’s not very smart (or not listening to smart people) he will fall into the exact same trap as W.

  • Observe&Report

    The national security argument for steel tariffs won’t work. It’s been investigated before as a legal avenue and, then as now, the United States continues to meet more than 70% of its steel consumption needs through domestic production. Most of the rest comes from friendly countries like Canada and Japan.

    So, yes, this is definitely symbolic rather than substantive. A much better avenue is to pursue more aggressive sanctions against Chinese companies that steal American intellectual property, which many of them do.

  • Anthony

    After Xi and Trump met in Florida, China expressed a willingness to end its ban on U.S. beef imports and limit exports of steel to the United States along with loosening restrictions on America’s investments (Finance sector) in China. So Post adds nothing new regarding China and U.S. trade arrangement but time will tell (administration still has 3 years plus).

  • Jacksonian_Libertarian

    Trump just asks, it’s them that fall all over themselves to brown-nose. The Authoritarians fear America, did you listen to them squeal when Trump missiled Syria? Everyone of them is making aggressive faces, to hide their terror from their own people.

    “If you can make god bleed. Then there will be blood in the water. And the sharks will come.” This is what they fear, if they’re ever seen as weak.

  • Kevin

    It could be both. Symbolic measures could indicate a desire to compromis buy time fir for China to negotiate a solution, without the gem Trump might feel compelled to move quickly to unilateral measures.

© The American Interest LLC 2005-2017 About Us Masthead Submissions Advertise Customer Service