US in fresh crackdown on Chinese steel imports

An employee works on the production floor at the Marlin Steel Wire Products factory in Baltimore, Maryland, US, on Thursday, March 14, 2024.
[Getty Images]

The US has announced new rules targeting firms from China and other countries that are routing shipments of steel and aluminium through Mexico to try to evade tariffs.

The White House said firms shipping via Mexico must now prove the origins of their products if they want to avoid the border taxes.

The move comes as President Joe Biden seeks to prove his tough-on-China credentials as he faces off against his predecessor, Donald Trump, in the 2024 presidential election.

The measures expand protections for US steel and aluminium-makers that were launched under Mr Trump in 2018 in the name of national security.

The tariffs, which set a 25% tax on steel and 10% tax on aluminium imports, were controversial, sparking trade battles with countries around the world.

Mexico, one of America's largest trade partners, was among the countries to eventually win an exemption from the rules.

The White House said it decided to revisit the exemption for Mexico, as an increase in imports from the country suggested it was being used as a stopping point to bypass the taxes.

Only about 13% of the steel imported from Mexico last year - and only 6% of aluminium - originated from outside of North America, according to officials.

But officials said the rules were aimed at heading off a further increase, as China's flagging domestic economy leads firms to look abroad.

Companies shipping steel to the US must now prove it has been melted and poured in North America under the new rules, which were jointly announced with Mexican President Andres Manuel Lopez-Obrador.

For aluminium, firms must prove it has not been smelt in China, Russia, Belarus or Iran.

The head of the Alliance for American Manufacturing praised the new measures, calling them a "step forward in countering China's predatory trade practices and making North American steel trade more fair".

"This is the right call by the Biden administration," the group's president Scott Paul said in a statement.

"China and other nations must not be allowed to exploit trade with our neighbours in order to avoid US trade enforcement."

But others said the administration should have gone further to curb imports from Mexico.

"We need to reinstate tariffs on Mexican steel until their imports are back to sustainable levels," Senator Sherrod Brown, a Democrat from Ohio, wrote on social media.

When he took office, President Joe Biden tried to ease trade tensions, replacing many of the Trump-era tariffs with other protections such as quotas for countries like the UK.

But he also kept in place or expanded other tariffs imposed by his predecessor, a sign of a major shift in American politics, once known for its promotion of free trade.

Party leaders are responding to backlash against globalisation among voters, especially in key electoral battleground states such as Pennsylvania, formerly home to a large steel industry.

Both Mr Trump and Mr Biden have spotlighted their protections for the steel industry while courting voters in the state.

If elected, Mr Trump has vowed to go further than he did during his first term as president, proposing a 10% tariff on all imports, which would rise to 60% on goods from China.