08 July, 2017
Chinese President Xi Jinping has also defended free trade in several speeches. In its communique, the G-20 pledged renewed efforts to combat excess capacity in the steel industry, one of the officials said. "Why should [they] do that unless they feared being singled out for retaliation?" Foreign products account for 30% of the American steel market.
When asked during a news conference Wednesday whether steel would be an issue discussed during the G20 summit, German government spokesman Steffen Seibert said, "That will become apparent".
It's not that all is well in the global market for steel.
Nevertheless, multiple global trade groups have voiced their disdain for potential steel or aluminum tariffs stemming from the Section 232 investigation. Global institutions such as the World Trade Organization are premised on the concept that trade is in their members' mutual interest and that they will therefore rarely, if ever, seek exceptions to the rules based on subjective individual claims such as national security - as opposed to measurable violations such as dumping goods below production cost.
US companies say that the Chinese steel boom is also due to unfair government subsidies and state ownership, which protects steel mills from market forces and causes them to produce much more steel than the world needs.
This afternoon in metals news, gold inches upward, partially stemming from concerns on the heels of a North Korean missile test; Germany, among others, waits to hear what the U.S. has to say about steel; and, in anticipation of protectionist policies from the Trump administration, U.S. Steel rose by 8% in June.
The G-20 decided at last year's summit in China to create a global forum to tackle oversupply.
"There is a danger that the summit will lead to polarisation between the United States and other countries" on climate change and other issues, warned economist Adam Slater from Oxford Economics. "But what I would like to tell you is that within a few days - we won't need two months for that - we could react with countermeasures". But the deal faced opposition in Congress under Obama, and Trump formally ended its chances when he withdrew the USA from the deal upon taking office.
"Unless the Chinese come forth with something they haven't offered-which I'm skeptical about-then, yeah, I think this will be a point of conflict", he said.
The International Fair Trade Alliance (IFTA) opposes tariffs or other restrictions on United States imports of primary aluminum, because such restrictions "would only bolster China's determination to export illegally subsidized and unfairly traded semifabricated aluminum products", it said. It's time for Trump and the media to focus far less on his tweets than his policies, which could result in the summit kicking off a disastrous global trade war. The Commerce Department review relies on a little-used provision of the Trade Expansion Act of 1962 known as Section 232, which gives Trump significant authority to investigate whether imports-in this case of steel-threaten national security. "That could really poison the atmosphere in the room and distract from all the other issues on the agenda".
The U.S. started cracking down on cheap steel imports in 2016 when Barack Obama was still president.
If Trump is able to use the summit to negotiate a united front against Chinese steel, he could boost the USA industry without straining ties with foreign allies.
He also said it was hard to believe that Japan and South Korea would "put up with this much longer". "Section 232 measures could target a significant part of the 3.7 million [metric tons] of USA imports from European Union member states". A similar challenge led to a rollback of tariffs imposed by President George W. Bush in 2002.
"The EU is a traditional and reliable steel supplier of the U.S., the EU member states concerned are North Atlantic Treaty Organisation partners of the U.S. There is therefore no justification for targeting any steel supplies from the EU", Eurofer said.
"We are going to see probably more private conversations about the Section 232 process under way in the USA", said Joshua Meltzer, a senior fellow at the Brookings Institution in Washington.