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Kallanish Kallanish

Knowledge matters Knowledge matters

January, 28th 2020

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Kallanish Steel Weekly: Section 232 stirs debate and diplomacy (April 4, 2018)

The new US tariffs on steel and aluminium were a hot topic at the 16th International Steel Markets and Trade Conference in Xian last week. There was little sign that any participants expected either China or the US to give up their basic positions, but all sides were at least diplomatic in their comments, and one Chinese analyst rejected the use of protectionism as a punitive measure.

International cooperation is important but it must be backed up with action on overcapacity and on fair trade, says Phillip Bell, president of the US Steel Manufacturers’ Association. The US has extended the deadline to negotiate exemptions to 1 May, and security allies of the US may be able to secure deals, he notes.

The proposed deal with South Korea, whereby US import tariffs will be replaced by a quota in exchange for increased access for US car makers selling to the Korean market, is fair, Bell adds. At the end of last week, however, President Donald Trump indicated that he may delay signing any deal until he has met with North Korean leader Kim Jong Un. The move appeared to be an attempt to further use trade issues to ensure South Korea presents a united front with the US on North Korea.

In the USA, capacity utilisation has not hit 80% in over a decade, whereas an adequate utilisation rate would be around 80-85%, Bell says. Domestic steel demand could also be boosted by increased infrastructure spending and the reduction of corporate taxes and regulations, he argues. Combined with a decline in imports, this should return the sector to a more healthy state.