China Gets Hit with a 522% Tax Increase on Steel Imports to U.S.

As accusations against China for its “unfair trading practices” are increasingly making a presence in U.S. political discourse (especially in this election year), the United States has raised its import duties tax on Chinese steelmakers by an astronomical 522%.

The fivefold tax increase applies specifically to Chinese-made cold-rolled flat steel, the material used in car manufacturing, shipping containers, and construction.

Resentment over China’s trade methods are not confined to U.S. political leaders, rather the rancor is felt internationally as well; U.S. and European steel traders claim, for instance, that China is distorting the global market and undercutting them by “dumping its excess supply abroad.”

The U.S. Commerce Department also established anti-dumping duties of 71% on Japanese-made cold-rolled steel.

Asia business correspondent for BBC News Karishma Vaswani discusses the politics behind the Commerce Department’s ruling. “The ruling itself is only directed at what is a small amount of steel from China and Japan and won’t have much of an impact – but it is the politics of the ruling that’s worth noting,” she explains.

Ms. Vaswani continues, “U.S. steel makers say that the Chinese government unfairly subsidizes its steel exports. Meanwhile China has been under pressure to save its steel sector, which is suffering from over-capacity issues because of slowing demand at home.”

China’s Ministry of Finance has not directly responded to the U.S.’s ruling though its website announced this morning that China will maintain its current tax rebate policy for steel exports “as part of its efforts to help the bloated steel sector recover.”

A separate filing was made to the International Trade Commission by major American steelmakers imploring them to completely ban all Chinese steel imports.

The U.S. steel industry contends that approximately 12,000 workers have been laid off this past year alone due to China’s skewed competition. However, China claims that a weak economy is to be blamed for the industry’s problems and not their own practices. Furthermore, China asserts that it has taken steps to reduce its steel production.

Last year, China’s exports of cold-rolled steel flat materials to the U.S. were valued an estimated $272.3 million. A 522% tax on that is quite that stack of cash.