The United States Treasury Secretary Janet Yellen stated on Thursday that the Biden administration will not abandon any options to address China’s industrial overcapacity, which is a top concern for the U.S. and its allies. Several Latin American countries have already taken countermeasures against China’s steel exports.
Yellen, speaking in Washington, DC to Reuters, said that Beijing’s practice of achieving full employment through exports is unacceptable to other countries around the world.
During her visit to China earlier this month, Yellen successfully raised concerns with Chinese officials about Beijing’s exports of electric vehicles, solar panels, and other clean energy products to global markets, which pose a threat to American jobs. She added that while Chinese officials admit there is an issue of industrial overcapacity, they need to address it.
She emphasized that this issue threatens similar producers in the U.S., Europe, Japan, as well as emerging markets like India and Mexico. Last week, during the International Monetary Fund and World Bank Spring Meetings, she had further discussions with Chinese officials in Washington, DC on this issue.
Yellen added that this problem will not be resolved “in a day or a week.”
“Therefore, it is crucial that Beijing recognizes this issue and starts taking action to address it,” she said. “But we do not want our industry to be simultaneously destroyed, so I am not willing to rule out any options.”
The Biden administration is finalizing a review of the tariffs on Chinese imports imposed by former President Trump in 2018 under the “301 provisions,” with U.S. officials indicating that certain products may face higher tariffs.
President Biden recently called for tripling the import tariffs on Chinese steel to 25%.
U.S. Trade Representative Katherine Tai also informed members of Congress that the U.S. needs to take early decisive action to shield the nascent American electric vehicle industry from the impact of Chinese imports. Currently, the import tariff on Chinese cars in the U.S. is about 27.5%, and Chinese electric vehicles sold in the U.S. are currently few.
Yellen stated: “We have no problem with China producing, selling, and exporting (goods) globally, but the U.S., Europe, and other countries also want to participate in producing clean energy products, which will be very important.”
Due to the approximately 50% cheaper steel imports from China, some Colombian steel mills have begun to reduce production, prompting Colombian authorities to consider raising the current 5% tariff. The country’s only integrated producer, Paz del Río, is lobbying for the government to implement a maximum 35% tariff, with a decision expected in the coming weeks.
If Colombia increases tariffs, it will follow the footsteps of Chile, Mexico, and Brazil, as slowing domestic demand in China means more steel is being shipped to Latin America, where tariffs are lower than in the U.S. and Europe. Data compiled by Kallanish Commodities shows that China’s steel shipments to Colombia in the first quarter of this year grew by 46% year-on-year.
Currently, even facing the risk of deteriorating trade relations with major partners like Beijing and raising local steel buyer prices, Latin American countries choose to protect steel mills and employment.
In the face of a flood of cheap imports dominated by China, Brazil has implemented import quotas on 11 alloy products to strengthen protection for its domestic steel manufacturers.
Brazil’s Ministry of Development and Industry announced on Tuesday that shipments exceeding the quotas will be subject to a 25% tax, compared to the current 11% tariff. Additionally, higher tariffs will be imposed on products that exceed a 30% growth in import volume compared to the average level from 2020 to 2022. The measures are expected to take effect in around 30 days and will be valid for one year.
Chile has also recently imposed temporary anti-dumping tariffs on Chinese steel used in the country’s mining industry.
(This article references reports from Bloomberg.)