After announcing new restrictions on Chinese steel and aluminum products, the US has not stopped.
Recently, the United States and Mexico jointly announced the imposition of tariffs on some steel and aluminum imports from Mexico. The White House stated in a statement that the United States will implement melting and casting requirements on imported steel products from Mexico, and will increase the 232 tariff rate on Mexican exports of steel and derivative steel products melted and cast outside of Mexico, Canada, or the United States.
White House National Economic Council Director Lael Brainard stated that this measure imposes a 25% tariff on steel from Mexico that has not been melted or cast in the country, the United States, or Canada, and a 10% tariff on aluminum cast or refined in China, Russia, Iran, or Belarus and shipped through Mexico.
The White House stated in a statement that this move can address the issue of overcapacity in steel production.
The above measures have come into effect on July 10th.
According to Liu Pengyu, spokesperson for the Chinese Embassy in the United States, cited by the Global Times, the claim of "overcapacity in China" is an "unfounded accusation" and a political tool used by the United States to smear and suppress the Chinese economy. "The trade protectionism measures taken by the United States will hinder global trade, damage Sino US economic and trade relations, and disrupt the stability of the global supply chain.
Yan Guangpu, an anti-dumping financial expert at Dao Yue Legal Consulting, told First Financial reporters that in addition to the 232 tariffs introduced by the US government, US industry can also curb China's transfer of products exported to the United States by applying for anti circumvention investigations and anti-dumping investigations against Mexico; In the future, the US will continue to use various trade remedy measures to block Chinese outbound enterprises, and the front line has already spread to other countries. In the long run, the actions of the United States will definitely harm others and not benefit oneself, "he said.
Add a regulatory link for melting and casting
The statements from the United States and Mexico emphasized the requirements for melting and smelting. The White House stated in a statement that in order to further protect the North American market, the United States will implement separate melting and smelting requirements for certain steel and aluminum materials imported from Mexico, so that these steel and aluminum materials can enter the United States without tariffs under Section 232 of the 1962 Trade Expansion Act.
The statement also stated that in order to improve the transparency of the origin of imported products, Mexico requires importers to provide more information about the country of origin of steel products.
Previously, on April 17th, the White House website announced plans to impose new restrictions on Chinese steel and aluminum products, including increasing the 301 tariff on Chinese steel and aluminum products to three times the current level. At that time, the United States had already expressed its intention to cooperate with neighboring countries to prevent China's steel and aluminum products from being indirectly exported to the United States.
According to Section 301, the average tariff previously imposed on certain steel and aluminum products was 7.5%.
According to US statistics, since the Biden administration took office, the US Department of Commerce has imposed over 30 anti-dumping and countervailing duties on steel related products. Meanwhile, the US Department of Commerce has conducted nearly 27 investigations into Chinese exporters' anti competitive behavior and other countries' evasion of trade rules.
At that time, the White House statement stated that Biden was directing his senior team to work with Mexico to prevent the use of Mexico as a transit point for exporting steel and aluminum to the United States to evade tariffs.
On April 18th, a spokesperson for the Ministry of Commerce stated that China has taken note of the relevant information. The accusations made by the United States against China have no factual basis, and the relevant measures are typical unilateralism and protectionism. China firmly opposes this.
The spokesperson of the Ministry of Commerce stated that since 2018, the United States has selectively imposed tariffs on steel and aluminum products from global trading partners under the pretext of "national security", and has also used this as a means to coerce trading partners into accepting unfair conditions, which has been opposed by many WTO members. The US measures have been ruled by the WTO to violate WTO rules.
Public information shows that the US launched a 301 investigation into China during the previous administration and subsequently imposed tariffs. On April 4, 2018, the Chinese Ministry of Commerce submitted a consultation request to the WTO dispute settlement mechanism regarding the taxation proposal under the US 301 investigation into China, officially launching the WTO dispute settlement procedure.
On September 15, 2020, the WTO panel released its report on the WTO dispute over the US 301 tariff measures, determining that the US tariffs in question violated WTO obligations.
The spokesperson of the Ministry of Commerce also stated that the United States ignores the international economic and trade order and rules, politicizes economic and trade issues, abuses the so-called 301 tariff review procedure, publicly demands arbitrary adjustments to tariffs on Chinese products, transfers contradictions, is making mistakes again and again, and does not help solve the problems faced by domestic industries in the United States. US pressure on other countries to restrict Chinese products will further undermine the security and stability of the global industrial and supply chains.
How should Chinese enterprises respond
It should be explained that Biden previously targeted China's tariffs on steel and aluminum exports to the United States, and this new tariff will apply to goods entering the United States through Mexican customs.
Due to the USMCA agreement between the United States, Mexico, and Canada, many products from Mexico are eligible for duty-free entry into the United States.
According to US data, in 2023, the United States imported approximately 3.8 million tons of steel from Mexico, of which 13% was melted and cast outside of North America. In 2023, the United States imported 105000 tons of aluminum from Mexico, of which 6% was smelted or cast abroad.
Although the current import volume of such products is not large, according to reports, an official of the Biden administration stated that the new requirements are "forward-looking" and aimed at preventing a possible surge in Chinese steel imports.
Yan Guangpu told First Financial reporters that the countries exempted from the 232 tariff on steel products by the US were Argentina, Australia, Brazil, Canada, Mexico, and South Korea; The countries that were previously exempt from the 232 tariff on aluminum products were Canada and Mexico, but now it has been changed to a conditional exemption for Mexico, which means that steel must be melted and cast in Mexico, and aluminum cannot be used from the listed countries such as China and Russia.
He explained that, therefore, when making steel products in Mexico, steel raw materials from local steel mills or Canadian and American steel mills must be used, while when making aluminum products in Mexico, aluminum raw materials from countries other than China and Russia must be used.
However, it should be noted that "for products composed of complex components, steel and aluminum are only a part of the product and have been assembled before being imported from Mexico to the United States, the US customs should not require tracing the source of the steel and aluminum. Unless the impact of such products has reached the level determined by the United States as a threat to national security." He said that the subsequent US imposition of 232 tariffs on imported steel and aluminum from Mexico should still be based on the products listed in its previous three announcements, but it is not ruled out that the US customs will impose 232 tariffs on steel and aluminum derivatives imported from Mexico that are not listed in these three announcements. If the amount of steel and aluminum products imported from Mexico that are not listed continues to increase, it will attract the attention of the US government, "he added.
He also stated that Chinese investment companies engaged in the manufacturing and processing of steel and aluminum products in Mexico need to pay attention to the details of the US Customs' subsequent implementation of 232 tariffs on steel and aluminum products imported from Mexico.
Taking the low-speed cars recently investigated by the US anti-dumping and countervailing measures as an example, these cars use a large number of steel components. From the current scope of 232 steel and aluminum taxation, this type of product is not listed. But for example, if Chinese companies go to Mexico to produce low-speed cars and continue to use Chinese made steel components, will they be required to impose 232 tariffs
I don't think so, although the announcement stated that the list of steel and aluminum derivatives is not limited to the ones listed. This essentially leaves room for other steel and aluminum products to be taxed. Therefore, the 232 tariff will bring tariff uncertainty risks to the Chinese steel and aluminum product manufacturing industry that has relocated to Mexico, "he explained.