The United States has significantly increased tariffs on certain products from China. The White House announced on Tuesday (May 14) that tariffs will be imposed on $18 billion worth of imported goods from China. The new tariffs cover multiple sectors, including some steel and aluminum products, especially aluminum products with higher added value and greater employment implications that are of significant impact on China.
In the early morning of May 14th Eastern Time (5 p.m. Beijing Time), the White House issued a statement, with President Biden instructing the Office of the U.S. Trade Representative (USTR) to increase the tariff rates on certain steel and aluminum products under the “301 investigation” from 0-7.5% to 25% in 2024. The specific implementation date has not been disclosed.
According to a report by Caixin, the Biden administration’s imposition of tariffs on certain steel and aluminum products will have a greater impact on China, particularly on aluminum products with higher added value and more employment implications.
In 2023, the United States became China’s largest exporter of aluminum products (aluminum and aluminum materials, as well as aluminum products) for the 15th consecutive year, with China exporting a total of 691,000 tons to the US, amounting to $3.79 billion, of which aluminum products accounted for nearly 66%.
Industry experts have suggested that caution should be exercised regarding the U.S.’s imposition of tariffs. This is because the Chinese aluminum products exported to the United States mainly consist of aluminum and aluminum-containing products, which are primarily supplied by private and small to medium-sized enterprises, making these enterprises most affected by this round of tariff increases.
In addition, China’s aluminum industry is export-oriented, with over 40% of aluminum supply serving as part of the export supply chain. With low technological barriers in aluminum materials and their products, China may face difficulties regaining market share in the US once tariffs are imposed, despite potential short-term supply shortages.
It is reported that transit trade is currently under scrutiny by the United States. In the North American Free Trade Agreement comprising the United States, Canada, and Mexico, goods can flow freely. Therefore, the U.S. is questioning the export of Chinese steel and aluminum products to Mexico for simple processing before entering the US, and has exerted pressure on Mexico regarding this matter.
In April, Biden stated that he would cooperate with Mexico to prevent countries like China from evading steel and aluminum tariffs by using Mexico as a transit point. Mexican President López also signed a decree on April 22, requiring temporary import tariffs ranging from 5% to 50% on hundreds of goods imported from countries without trade agreements with Mexico, including steel, aluminum, and their finished products, effective for two years starting the day after the decree was issued.
Several interviewees mentioned that if transit products were closely traced, it would indirectly affect the volume of Chinese steel and aluminum product exports. In 2023, the incremental steel exports mainly flowed to regions such as ASEAN and South America, with steel exports to South America reaching 7.606 million tons, a 42.6% year-on-year increase. In the same year, the volume of aluminum products exported to Mexico was second only to the United States, amounting to 568,000 tons.