U.S. places big tariffs on Chinese steel

Metal profile and pipes on white background. 3d

Metal profile and pipes on white background. 3d

The Times of Northwest Indiana reports that U.S. regulators have slapped huge tariffs on foreign steel in response to accusations that some countries are “dumping” their products on the American market. “Dumping” means that companies sell the steel for less than it costs them to make it. This is possible in countries that subsidize their steel industry in order to keep people working.

Companies in capitalistic countries are disadvantaged by this practice because they can’t compete on price, a major factor in what’s happening right now in the American iron ore and steel industries.

This from the Joseph Pete story in the Times:

In a preliminary determination, the Commerce Department decided to place 227 percent tariffs on all cold-rolled products from China, to offset the high subsidies those companies receive. Duties of 7.42 percent will be placed on Brazilian steelmakers, while steel producers in Indian and Russia will face tariffs of 4.45 percent and 6.33 percent respectively.

Those rates are meant to offset, or countervail, subsidies that governments in those countries give to their steelmakers.

Foreign steelmakers will have a chance to rebut the case made against them in a hearing before the Commerce Department reaches a final decision.

That 233 percent tariff placed on Chinese steel is eye-opening. It shows the degree to which Chinese steel is being subsidized right now. I linked to a story yesterday in which Chinese economist Andy Xie predicted low iron prices to continue indefinitely. Yet Xie also said China can’t afford to subsidize its industry like this much longer. He expects several big companies all over the world, including China, to go bankrupt. Only reduced supply can provide any support for higher prices.

With these U.S. tariffs on the table, we may see restoration of order for the international steel trade. That could bring some relief to local mines this year, or at least keep more of them open longer. But remember, as long as the global price of iron ore is below the price it costs Iron Range mines to produce the same product, our mines are in danger. Legal foreign imports might cost more, but will still be cheaper than American steel under these conditions.

A smaller, more efficient Iron Range mining industry with fewer workers and plants is my prediction. There will be plenty of mining in our future, just not as many mines or miners.


  1. US officials can’t really impose unilateral tariffs. There will be a process of retaliation, and claims of protectionism next. Trade ministers will decide to either support or oppose each other based on their own self-interests. This process continues in all different types of industries daily.

    For example, officials tried to impose rules on country of origin labels for meat products sold inside the United States. Canada and Mexico opposed the policy because it harmed their equity. Trade ministers from countries all over the world chose sides based on a plethora of issues and loyalties.

    Then, there are matters of other industries within the United States whose livelihood depends on the cheaper steel (or meat, crayons, toilet paper, whatever). Are certain groups of workers more important than other groups of workers?

    Your chaos theory makes sense Aaron…

  2. They have, and multiple times and on steel imports in the past few decades.

  3. I have some feelings and questions. People suddenly complain about China in regards to the Iron Range. We were led to believe China was the answer before. China was the reason this did not happen sooner. Range steel was building China. That was a common perception. How true is that? I realize India played a part as well as other burgeoning middle class economies. Why was it not a national security concern to build China and ship American steel to China? Now we are supposed to see it as a national security issue?

Speak Your Mind


This site uses Akismet to reduce spam. Learn how your comment data is processed.