McQuaid Group: A trade row between the United States and China has erupted with Beijing demanding the lifting of a new 500% duty on some of its steel exports.
The increase in tension followed a ruling by the US commerce Department last week that significantly increases tariffs on Chinese cold-rolled steel, which is used in the manufacture of washing machines and automobiles.
Trade tensions between the two countries have been brewing for some time but have escalated considerably this year -- particularly over steel. China has encountered opposition in Europe as well over its policy of dumping excess supply of steel on European markets at prices which seriously undercut those of homegrown producers.
Last month, US Steel accused dozens of Chinese producers of contravening trade rules and lobbied the US International Trade Commission to investigate. China produces more steel than the US, European Union, Russia and Japan combined.
“China has been reluctant to tackle the problem of oversupply because many of its steel mills are also huge employers. The government provides large subsidies to these companies in order to keep workers in jobs and companies propped up despite glaring inefficiencies,” explained McQuaid Group’s commodities strategist Larry Birch.
Beijing has justified its policy, saying overcapacity is a global issue brought on by sliding demand. The government says it is amenable to working toward solving the problem and has announced it is to cut 500,000 in its own steel mills.
“The G7 has talked tough on protectionism and currency manipulation but it seems that China is placing its own interests firmly ahead of those of its trading partners,” concluded Birch

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