Is China the real target of Trump's 25% tariff on steel, aluminum?

US President Donald Trump, continuing his sweeping trade measures, has announced 25 per cent tariffs on steel and aluminium imports in an effort to aid the recovery of struggling domestic industries.

While the tariffs are expected to hit countries like Canada, Mexico, Brazil, etc, China will likely bear the brunt of the measure indirectly. America’s top five suppliers of steel are Canada, Brazil, Mexico, South Korea and Germany while China is far behind this list.

Trump signed proclamations raising the US tariff rate on aluminium to 25 per cent from his previous 10 per cent rate and eliminating country exceptions and quota deals as well as hundreds of thousands of product-specific tariff exclusions for both metals. A White House official confirmed the measures would take effect on March 4.

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The move will simplify tariffs on the metals “so that everyone can understand exactly what it means,” Trump told reporters. “It’s 25 per cent without exceptions or exemptions. That’s all countries, no matter where it comes from, all countries.”

How will it affect China?

The United States does not import significant amounts of steel or aluminium directly from China. Over the years, multiple presidents and Commerce Department decisions have led to numerous tariffs on Chinese steel. More recently, tariffs on Chinese aluminium have also increased. In September, former President Joe Biden further raised tariffs on various Chinese steel and aluminium products, imposing hikes of up to 25 per cent.

While it might not be a key exporter to the US, China tops the global market of steel and aluminium. According to a report by the New York Times, China produces more of both metals than the rest of the world combined.

China’s new strategy

Although much of the steel and aluminium it produces are utilised domestically, China has been exporting the metals more recently to meet the demands of a sluggish economy. Most of these exports are routed to US allies like Canada and Mexico which in turn sell them to America.

China exports a significant amount of metal to developing nations like Vietnam, which purchases large volumes of semi-processed steel, completes the production process, and then sells it worldwide as Vietnamese steel.

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Michael Wessel, the trade advisor to the United Steelworkers of America said, “China’s overcapacity is swamping world markets and severely injuring US producers and workers.”

With inputs from agencies