Tag: dumping

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Penalties Imposed for Unfair Trade

A number of nations have engaged in the practice of “dumping” in the American market.  The practice reached a dangerous crescendo when the powerful Chinese economy used this tool of economic warfare on a significant scale.

Dumping is defined by The Balance as “when a country’s businesses lower the sales price of their exports to gain unfair market share. They drop the product’s price below what it should sell for at home. They may even push the price below the actual cost to produce. They raise the price once they’ve destroyed the other nation’s competition.”

 In 2018, the White House   issued a statement noting that “China has dumped and unfairly subsidized a range of goods for the United States market, undermining America’s domestic industry. In 2018 alone, the Trump Administration has found dumping or unfair subsidies on 13 different products, including steel wheels, cold-drawn mechanical tubing, tool chests and cabinets, forged steel fittings, aluminum foil, rubber bands, cast iron soil pipe and fittings, and large diameter welded pipe. In January 2018, the Trump Administration found that China’s overproduction of steel and aluminum, and the resulting impact on global markets, is a circumstance that threatens to impair America’s national security. The United States has run a trade in goods deficit with China for years, including a $375 billion deficit in 2017 alone.”

The Trump Administration views China’s dumping as part of the larger spectrum of Beijing’s unfair trade practices, which it is seeking to substantially curb, noting:

“For many years, China has pursued industrial policies and unfair trade practices—including dumping, discriminatory non-tariff barriers, forced technology transfer, over capacity, and industrial subsidies—that champion Chinese firms and make it impossible for many United States firms to compete on a level playing field. China’s industrial policies, such as its “Made in China 2025” plan, harm companies in the United States and around the world. China imposes much higher tariffs on United States exports than the United States imposes on China. China’s average tariff rate is nearly three times higher than the average United States rate. Certain products are even more imbalanced, for instance the United States charges a 2.5 percent tariff on Chinese cars, while China currently maintains a 25 percent tariff on cars from the United States. China has banned imports of United States agricultural products such as poultry, cutting off America’s ranchers and farmers from a major market for their goods. China has dumped and unfairly subsidized a range of goods for the United States market, undermining America’s domestic industry…In January 2018, the Trump Administration found that China’s overproduction of steel and aluminum, and the resulting impact on global markets, is a circumstance that threatens to impair America’s national security. The United States has run a trade in goods deficit with China for years, including a $375 billion deficit in 2017 alone.”

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In September, the U.S. Department of Commerce announced the affirmative preliminary determinations in the antidumping duty investigations of imports of certain fabricated structural steel from China and Mexico, finding that exporters from China and Mexico have dumped fabricated structural steel in the United States.

The American Institute of Steel Construction Full Member Subgroup, headquartered in Chicago, brought the complaint.  

In response, The Commerce Department will instruct U.S. Customs and Border Protection to collect cash deposits from importers of fabricated structural steel from China and Mexico based on the preliminary rates noted above. In 2018, imports of fabricated structural steel from Canada, China, and Mexico were valued at an estimated $722.5 million, $897.5 million, and $622.4 million, respectively.

According to Commerce, “The strict enforcement of U.S. trade law is a primary focus of the Trump Administration. Since the beginning of the current Administration, Commerce has initiated 182 new antidumping and countervailing duty investigations – a 231 percent increase from the comparable period in the previous administration. Antidumping and countervailing duty laws provide American businesses and workers with an internationally accepted mechanism to seek relief from the harmful effects of the unfair pricing of imports into the United States. Commerce currently maintains 492 antidumping and countervailing duty orders which provide relief to American companies and industries impacted by unfair trade.”

A final determination on the complaints is expected on January 24, 2020

Photo: Pixabay

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China attacks U.S. Steel Industry

In a rare display of bipartisanship not only on Capitol Hill but between labor and management, action against China’s harmful against the American economy is taking place.

The U.S. Department of Commerce has found that Beijing is “dumping” (a term indicating that  nation is selling a product at less than normal value or the cost of production Typically, the goal of this is to destroy the local industry and establish a monopoly for the foreign source.) steel products in the United States.

The Department of Commerce has concluded Chinese dumping has occurred in several areas, including:

  • Producers/exporters of steel nails from China have sold steel nails in the United States at up to 118.04 percent less than normal value. As a result of the affirmative final determination in the China investigation, Commerce will instruct U.S. Customs and Border Protection (CBP) to continue to collect a cash deposit or bond on entries of steel nails from China based on the final rates.
  • Imports of corrosion resistant steel products from China. A dumping margin of 255.80 percent was noted.

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Currency manipulation is another area in which Beijing wages economic warfare against other nations. AFL-CIO President Richard Trumka notes:

“China’s currency manipulation lowers the wages of Chinese workers and lowers manufacturing costs in China, creating an unfair trade advantage that has already cost millions of American jobs and closed thousands of American factories. This latest move, which will act as a tax on our exports and a subsidy for Chinese imports, further exacerbates the existing problem….The failure to address currency manipulation and undervaluation…has been a major cause of the U.S. trade deficit and manufacturing decline. It has turned trade agreements into trade tragedies and made the trade deficit a major drag on economic recovery.”

A Forbes Review noted that “Chinese steel exports rose roughly 25% year-over-year in the first ten months of 2015…The rising penetration of imported steels has driven down both shipments and realized prices of domestic steel producers. U.S. Steel reported year-over-year declines of 27% and 8% in shipments and average realized prices respectively for its U.S. Flat-rolled Steel division in the first nine months of 2015.  ArcelorMittal’s NAFTA division reported year-over-year declines of 3% and 13% in shipments and average realized prices respectively in the first nine months of 2015. Domestic steel mills have idled nearly 38% of their total production capacity in response to the increase in steel imports.The imposition of anti-dumping duties on Chinese steel imports will make them prohibitively expensive, which should boost both demand and pricing for domestically produced steels. The final determination of duties on imports is expected by mid-2016.”

Unlike private companies, government-owned concerns can engage in extensive dumping practices without worrying about the bottom line. The American Manufacturing Organization, citing a Wall Street Journal study, noted that “most of these companies [engaging in dumping] were government-owned or closely linked to local governments — and given their role as employers and providers of tax revenue, those mills are ‘unlikely to close or cut production even if running losses.‘ Major state-owned steelmakers also continue to have their loans rolled over or refinanced. And on top of all that, the Chinese government manipulates its currency, giving Chinese steelmakers a major economic advantage… As a result, more than 12,000 steelworkers have been laid off in recent months. Steel plant activity is operating below 70 percent of its capacity, and major steelmaking facilities have closed. If things don’t change, additional layoffs and closures are expected.”

Concern over China’s practices led to the introduction of the American Trade Enforcement Effectiveness Act, H.R. 2523,  sponsored by Rep. Bost, Mike [R-IL. ] The legislation aims to ease the way for U.S. companies and workers to seek redress against unfair practices. The bipartisan measure currently has 46 co-sponsors. A companion bill, S1269,  was introduced into the U.S. Senate by Senator Orrin Hatch (R-Utah.)

The United States is not alone in its concern over China’s practices. The Financial Times reports that European states oare demanding that the European Union take action against Beijing as well.  According to the report, “Europe’s steel industry has lost a fifth of its workforce since 2009…European steel industry executives have accused China of using its massive overcapacity at steel mills to dump products on the European market, selling them beneath the cost of production.”