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KAI RYSSDAL: Steel pipes from China are today’s exhibit A for the tenuous nature of global free trade deals. Acting on a request the U.S. steel industry made back in April, today the International Trade Commission has decided that American producers have indeed been hurt by imports of subsidized Chinese pipes. That means the Commerce Department can raise tariffs on those pipes, making them more expensive to import — and, given the tit-for-tat nature of these kinds of things, virtually guarantees another round of back and forth sniping.
Marketplace’s Jeff Tyler has our story.
Jeff Tyler: The International Trade Commission still needs to submit written opinions to the Commerce Department, so new import duties won’t take effect for about two weeks. And it really only applies to Chinese pipes used mostly for oil production. But U.S. industry groups hail what they see as a necessary first step.
Nancy Gravatt: These Chinese steel mills were able to send product into the U.S. market at below what it costs to produce as a result of government subsidies.
That’s Nancy Gravatt, spokesperson for the American Iron and Steel Institute, a trade association. She says imports of Chinese steel tripled in recent years, and China’s steel mills continued at full capacity, even as the U.S. entered a recession.
Gravatt: This flood of imports was tremendously damaging to our market.
New import duties should make it too expensive for the Chinese to dump steel pipe in the U.S. Michelle Applebaum is a managing partner with the equity research firm, Steel Market Intelligence.
Michelle Applebaum: They have a problem. Because we’re actually the last one to the protectionist party. The Europeans and the Canadians have already put tariffs on that type of steel. So, where China is going to sell that steel, I don’t know.
Applebaum says China is producing expensive steel that’s tough to sell. But Chinese leaders face a backlash if they curb production.
Applebaum: They’re very worried about jobs. So they’ve had a very rough time shutting down some of these higher cost mills.
Chinese steel may become even more expensive next year. A separate decision about whether Chinese firms dumped steel in the U.S. is expected in March. That ruling could lead to additional tariffs.
I’m Jeff Tyler for Marketplace.
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