The play behind Trump’s tariffs on steel and aluminum

President Donald Trump’s promise to impose 25% tariffs on all US steel and aluminum imports on Monday has as its main target American allies, but deep down reaches its former enemy: China.

The five largest steel suppliers for the US market in January were Canada, followed by Brazil, Mexico, South Korea and Germany. Canada also leads aluminum exports to the United States, while United Arab Emirates, Russia and China are well behind.

China does not export large amounts of steel or aluminum directly to the US. A succession of presidents and decisions from the Trade Department have already imposed several rates on Chinese steel. Recently, rates on Chinese aluminum have also increased. Last September, President Joe Biden raised existing rates on many Chinese steel and aluminum products to up to 25%.

However, China dominates the global steel and aluminum industry. Its vast and modern laminators produce both or more of these metals each year and the rest of the combined world. Most of this volume is used within the Chinese borders for the construction of skyscrapers, ships, washing machines and cars.

In recent times, however, Chinese exports of steel and aluminum have increased, driven by the slowdown of the local economy, which reduces internal demand. Many of these low cost products are sent to US allies, such as Canada and Mexico, who in turn export much of their own most expensive production to the United States. Other Chinese metal shipments go to developing countries, such as Vietnam, which buys large quantities of semi -wing steel from China, concludes processing and then re -exports as Vietnamese steel for buyers worldwide.

This increase in Chinese exports has generated discontent between US producers and unions.

“China’s overproduction is flooding global markets and severely damaging US producers and workers,” said Michael Wessel, longtime commercial consultant at United Steelworkers of America.

China’s Foreign Ministry of Foreign Affairs avoided directly commenting on steel and aluminum tariffs during its daily briefing on Monday. “It is important to highlight that protectionism leads nowhere. Commercial and tariff wars have no winners, ”said spokesman Guo Jiakun.

Planned tariffs come a week after Trump imposes a 10% rate on all Chinese imports. In response, China announced that it would retaliate with rates on liquefied natural gas, coal, agricultural machinery and other US products, starting on Monday.

China’s steel overproduction originates from an extraordinary steel mill building boom that began in the early 1990s and lasted about 15 years, according to Nick Toilerus, a former steel industry employee during the Reagan government and former president of American operations of Thyssenkrupp Steel, Germany.

Since the 1940s, no country has dominated the global steel industry like China today. In the 1940s, the United States produced half of the world steel, but its participation fell to less than 5% today.

For years, construction in China has consumed huge amounts of steel. Real estate boom generated mass housing for 1.4 billion people, as well as excess of enough empty apartments to house another 300 million people.

This surplus of real estate led to a collapse in the real estate market and the abrupt stoppage of the buildings. To avoid closing factories, Chinese steelmakers have responded with an export exports to various countries, gradually reducing steel prices in recent years.

The drop in prices has damaged the American steel industry, a politically influential sector in key regions in the presidential election. The United Steelworkers of America union has its headquarters in Pittsburgh, in the heart of Pennsylvania industrial base, a crucial state in recent electoral disputes. US Steel, an icon of the old American industrial greatness, is also located in Pennsylvania.

The reaction against Chinese steel is not restricted to the US. Over the past 12 months, Brazil, Canada, Indonesia and Türkiye have significantly raised tariffs on steel imported from China.

During his first term, Trump imposed additional 25% tariffs on steel and 10% on imported aluminum around the world. Subsequently, he exempted countries with strong steel production, such as South Korea, Australia and Brazil, in exchange for the imposition of export quotas on the US. However, the rates on China were maintained.

These commercial protections have helped the American steel industry, which has increased its productive capacity by about 20% over the past six years, investing in the construction of modern plants. Meanwhile, older and less efficient steelmakers have begun to operate below their total capacity.

Until the last week of January, US steel mills were operating with 74.4% of their full capacity, according to the American Iron and Steel Institute, an industrial group based in Washington.