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Sino-US Steel Trade Friction Or Inevitable After Trump Came To Power?
Jan 16, 2018

After Trump came to power, the Sino-American steel industry may rub out "more sparks."

The Financial Times believes Trump has placed the U.S. steel industry at the center of its industrial policy. He promised to build Daxing infrastructure. Steel is the key material for infrastructure.       

Just this June, Trump pledged to deliver a "bright future" to US steel mills when he was elected president in a speech at a scrap aluminum processing plant (formerly a steel mill) in western Pennsylvania:

The hardened American bridge will be American steel, and the skyscrapers will tower into the skies will be American steel. We will make the steel produced in the United States back to the country's "spine."

 The U.S. steel industry is pushing Trump teams to take tougher trade protection measures. According to Reuters, the American Iron and Steel Institute (AISI) said on November 23 that since Trump was elected president, they have been in contact with Trump's transition team to seek more stringent trade defense measures from the Trump administration, I hope there are trade restrictions. However, they did not disclose the content and participants.Stainless steel CNC lathe Parts Manufacturer

This year, the American Iron and Steel Association has filed an industry complaint with Chinese manufacturers and distributors in an attempt to ban Chinese steel from entering the U.S. market through "unfair competition."

Trump cabinet's position is uncertain

According to the American Iron and Steel Institute (AISI), Dan DiMicco, an advisor to Trump, is a staunch advocate of the steel industry. Who is the main contender for the Trump administration's U.S. trade representative post and blames the devaluation of the U.S. industry on the personal blogs for fraudulent trading partners, notably China.

 

 Last summer Dan DiMicco wrote on her personal blog: "Hillary Clinton said Trump's trade policy would trigger a 'trade war,' but she did not realize we were already in a trade war." Trump Clearly understand this point, he will work hard to end China's 'mercantilist trade war'! A war against us for nearly 20 years!

 Wilbur Ross, who was named Minister of Commerce Wednesday, said recently that Trump's threat of imposing defensive tariffs on U.S. exports to China and Mexico is only part of the U.S.-led negotiations.CNC Turning Parts Manufacturer

 

Wilbur Ross had previously said that he was keen to encourage international trade, but any trade agreement needs careful design of the structure to ensure that it benefits the United States and said reducing the trade deficit does not mean that it will impose a 45% tariff on all Chinese goods. He was involved in the steel business and is well-known for having a strong free-market perspective.

However, Ross also said in an interview with Fox Financial Channel (FBN) that the U.S. will impose tariffs when necessary: "For dungers, punitive special tariffs will be imposed."

Pascal Lamy, former director of the World Trade Organization (WTO), said at the Caixin Summit on the 2nd that the trade policy is expected to soften after Trump took office. Trump may use some anti-dumping measures against the Chinese steel industry. However, these are all to be implemented under the WTO rules. There may be some radical measures but there is not much room for them.CNC Milling Parts Manufacturer

If there really is a trade war ...

If the Trump administration really launched a trade war with China, according to the Financial Times, Trump could take four major measures:

       1) The easiest to implement is to relax regulation. The executive set up and enforce federal regulatory rules, and if Trump needed legislation to get it there, he could expect to get the support of a Congress-controlled parliament.

        2) Reduce steel business tax. According to Steven Mnuchin, this is also the top priority for the Trump administration. This policy is also likely to win congressional support.

        3) As Trump previously promised, it invested one trillion U.S. dollars in U.S. infrastructure. Jefferies predicts that assuming US infrastructure investment increases by 100 billion U.S. dollars each year, US steel consumption will increase by 6%.

        4) Perhaps the most important one: stop the import of overseas low-cost steel products, especially China.

 However, the above measures are not a panacea, some of them facing domestic resistance.

Tax cuts, while helpful, are of limited direct benefit to the steel industry as they usually have to pay less taxes and fees. This year, AK Steel and US Steel did not generate any corporate income tax.

Trump's point of view has also largely deviated from the traditional free trade stance of the Republican Party. The New York Times said that since the president Ronald Reagan, Republicans and Democrats have been reluctant to fight against countries that may subsidize or dump their exports either because the evidence is not conclusive or because of the damage The risk of diplomatic relations or strategic relationships.Stainless Steel Cnc Machining Part Manufacturer

Although Trump threatened to levy a 45% tariff on all imports from China. But later he avoided talking about the details, and he did not have much power to do that. The law allows him to levy up to 15% of all imported goods for a maximum of 150 days only unless the state is declared in a state of emergency. Other laws provide that he can only impose duties on the target commodity.

Market point of view

According to Société Générale, if the United States is to launch a trade war, possible measures may include raising import tariffs on the basis of large-scale and grim balance of payments deficits or adopting quantitative restrictions such as import quotas and import permits Both measures are implemented at the same time.

 

Qu Hongbin, chief economist for Greater China at HSBC, and economist Julia Wang believe the all-round trade war between China and the United States is unlikely. And more difficult bilateral negotiations will continue. There is still room for more cooperation between the two sides in the field of bilateral trade. For example, the United States can rely on China's desire to see China slash heavy industry

The Financial Times quoted Jorge Beristain, an analyst at Deutsche Bank, as saying: "Trump has expressed how he will seek to boost employment in the US steel industry, signaling the market's reevaluation of the industry's view."

 Shares of Nucor, United States Steel and AK Steel, the nation's top steelmakers, rose 24%, 61% and 64% respectively after Trump won. CNC Screw Machining Turning Part ManufacturerThe three companies are also members of the American Iron & Steel Industry Association.


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