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US may impose heavy tariffs on China, Russia to counter steel, aluminum oversupply

The US Commerce Department

The US Commerce Department has recommended imposing heavy tariffs on China, Russia and other countries to counter excess supply of steel and aluminum which it says threatens US national security.

In two reports submitted to US President Donald Trump last month and made public on Friday, Commerce Secretary Wilbur Ross proposed a range of possible options, including a tariff of at least 24 percent on all steel imports worldwide, and a similar tariff on aluminum imports from China, Russia and three other countries.

Ross told reporters on a conference call that cheap imports had impaired US national security by making domestic production unviable.

Ross acknowledged that any US action is likely to be challenged by exporting nations in the World Trade Organization.

Trump has until mid-April to decide what remedies to impose. He met with a bipartisan group of US lawmakers at the White House last week, signaling he would take at least some action to restrict imports of the two metals.

US Senate Democratic leader Chuck Schumer said he hoped the proposals “are the beginning of efforts by this administration to finally get tough on China.”

Philip Bell, president of the Steel Manufacturers Association, welcomed the proposals saying they could be “meaningful and effective” in tackling global excess capacity and relentless steel imports.

But some analysts say they believe Trump will likely go for more targeted options.

“Utilizing a blanket tariff is too broad, in our view,” the Cowen Group financial services firm said in a statement. “There is a higher level of precision needed than a blanket tariff because depending on the product spread, it could for instance knock out one product, and do little to nothing for another.”

China’s Commerce Ministry responded by saying the report was “baseless” and did not accord with the facts, and that China would take necessary steps to protect its interests if the final decision affects China.

The new proposals are part of Trump’s so-called “America First” policy, which seeks to rewrite the rules of global commerce in favor of the US.

Trump has repeatedly blamed unfair trade deals and abusive practices by low-wage countries like China and Mexico for the massive US trade deficit and the loss of high-paying American factory jobs.

The US trade deficit in goods and services grew 12 percent in 2017 to $566 billion, its widest mark since 2008.

The goods deficit with China alone rose 8 percent during Trump’s first year in office to a record $375.2 billion, or nearly half the total global gap between US imports and exports, according to the Commerce Department.

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