China warns Trump trade sanctions threaten global economy

SHANDONG: A vendor packaging nuts at a market in Liaocheng in China’s eastern Shandong province. China’s factory inflation eased to a 14-month low in January while consumer price inflation dropped to a six-month low, official data showed. — AFP

WASHINGTON: US President Donald Trump said on Tuesday he was considering a range of options to address steel and aluminum imports that he said were unfairly hurting US producers, including tariffs and quotas. Trump's comments - his strongest signal in months that he will take at least some action to restrict imports of the two metals - came in a meeting with a bipartisan group of US senators and representatives at the White House. Reporters were present for part of the meeting.

Some of the lawmakers urged him to act decisively to save steel and aluminum plants in their states, but others urged caution because higher prices would hurt downstream manufacturers that consume steel and aluminum. Trump is weighing options presented last month by the US Commerce Department in parallel "Section 232" investigations into whether import restrictions on steel and aluminum are needed to protect national security. The probes were authorized under a 1962 trade law that has not been invoked since 2001.

"What we're talking about is tariffs and/or quotas," Trump said to the group. "Part of the options would be tariffs coming in. As they dump steel, they pay tariffs, substantial tariffs, which means the United States would actually make a lot of money."

Trump said that the steel and aluminum industries were being "decimated by dumping" and talked about the empty steel mills he saw on the campaign trail in 2016. "I look at it two ways: I want to keep prices down, but I also want to make sure that we have a steel industry and an aluminum industry, and we do need that for national defense," Trump said.

US steel stocks rose broadly after the comments, with the S&P 1500 steel index closing up 1.1 percent and outperforming the broader market. Alcoa Inc shares ended 1.4 percent higher, with Century Aluminum up 0.5 percent. Trump now has until around April 11 to decide whether to impose steel import curbs and April 20 to decide on aluminum restrictions. The Commerce Department has not revealed its recommendations in the probes launched last spring.

But Commerce Secretary Wilbur Ross told the lawmakers that Section 232 powers "can be applied in a much more surgical way" that could lead to tariffs on imports from certain countries and quotas from other nations suspected of transshipping products.

Some lawmakers came away from the meeting with the impression that Trump would impose some restrictions but understood the need for a balanced approach. "My belief is he'll take some action, but he was truly open to seeking input at the meeting today," Senator Roy Blunt, a Missouri Republican, told reporters at the Capitol.

Blunt, who said Missouri industries both make and consume steel and aluminum, told Trump in the meeting: "I think we do need to be careful here that we don't start a reciprocal battle on tariffs."

Steel used in energy industries

Several lawmakers cited the need to maintain US energy independence and the electrical grid. They urged steps to protect US producers of oil drilling and transport pipe and noted AK Steel is the last American producer of electrical steel for electric transformers.

Senator Rob Portman, a Republican from steel-intensive Ohio, told Trump that without relief from imports, AK Steel is "going to pull out of this business, so we won't have the steel that goes into our transformers and our grid."

China warning

US trade sanctions will hit the world economy, Beijing warned yesterday, after President Donald Trump threatened to impose fresh tariffs on imports from China. Trump said he was "considering all options," including tariffs and quotas, after he accused China of decimating the American steel and aluminium industries.

Washington has already imposed a range of tariffs on Chinese-made goods, sparking fears of a tit-for-tat trade war between the world's top two economies as China also threatens to take action.

Foreign ministry spokesman Geng Shuang told reporters that "any sign of unilateralism or protectionism will ... worsen global trade issues and will hurt the recovering momentum of the world economy". He added that with the sheer volume of trade and integration between the US and Chinese economies, some friction was natural.

However, "China always regards the US as an important cooperation partner in trade and economy, and we hope we will continue to open our respective markets wider", Geng said.

The Trump administration has two months to decide whether to take action on Chinese aluminium, steel and intellectual property practices. China produces around half of the world's steel but stands accused of "dumping" cheap steel on global markets to gain market share.

The two countries have already begun trading sanctions in what China's commerce ministry warned could become a "vicious circle". On Monday Beijing announced it had taken aim at imports from the US of styrene, a key chemical in the manufacture of styrofoam. Last week it launched an anti-dumping investigation into sorghum imports from the US, worth almost $1 billion last year. - Agencies