The US has imposed tariffs of more than 5005on Chinese cold-rolled steel used mostly in the construction of cars and washing machines in response to the country’s persistent flooding global markets with its cheap steel.

The US Commerce Department added anti-subsidy tariffs of 256.4% to anti-dumping duties of 265.8% on cold-rolled steel made by Chinese mills including Baosteel Group and subsidiaries of Ansteel Group. It also slapped much smaller tariffs on certain Japanese steel producers.

China’s capacity for producing steel has risen sharply in the last 10 years to more than 1 billion tonnes, pushing surplus production surging into international markets. Though policymakers call on producers to reduce capacity, they are unwilling to allow large mills to go out of business since they are typically the largest employers, taxpayers and borrowers in their locales.

“The mills are part of what many in the West call zombie corporations,” said Colin Phipps, chief economist at Shenzhen, China-based broker dealer, TCA Financial. “The government keeps them operating because they employ so many workers and because they are so indebted. Any default could cause problems for banks and financial institutions that lent to them.”

China is keen to be granted “market economy status” but pressure from US and European steelmakers has led to political opposition that may block the World Trade Organization granting the country that status.

“The imposition of these duties flies in the face of public statements where finance and trade ministers pledge to avoid protectionism and unfair subsidies that give one country’s produce competitive advantage over another but, as these events show, ultimately, countries are concerned primarily with their own interests,” said Phipps

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