China Calls Accusations “Untenable” in Response to US Shipbuilding Inquiry
Chinese officials and the state-run media continued the strong response denouncing the U.S.’s announcement of a trade investigation into the shipbuilding sector and efforts to triple the tariffs on steel. Chinese media writes the U.S. administration is using an “old playbook of unilateralism and protectionism,” saying it will fail to reshore manufacturing and result in a more expensive supply chain.
China’s Commerce Ministry issued a series of statements responding to the U.S. announcements and said regarding the steel tariffs that, “China has urged the U.S. to confront its internal challenges, while also demanding the immediate removal of imposed tariffs.” They responded by accusing the United States of abusing the Section 301 tariff review while saying the World Trade Organization has ruled the U.S. measures violate global trade rules.
Addressing the application for the review of the maritime, logistics, and shipbuilding industries filed by five U.S. unions in March 2024 with the U.S. Trade Representative they asserted it “lacks factual basis and goes against economic common sense.” They are citing China’s efforts since the 1980s to build the shipbuilding industry saying that their success is the result of enterprises’ technological innovation and active participation in market competition.
“Multiple U.S. research reports show that the U.S. shipbuilding industry has lost its competitive advantage many years ago due to over-protection,” the Ministry of Commerce spokesperson said. “The United States provides hundreds of billions of dollars in discriminatory subsidies to its own industries, but accuses China of adopting so-called ‘non-market practices’.”
China is calling for the United States to “return to the rules-based multilateral trading system,” while also referencing the “domestic political needs” ahead of the upcoming U.S. presidential elections. Media reports in China are saying supporting labor unions is critical in a U.S. election year.
They are saying the U.S.’s actions would have a “minimal impact on Chinese shipyards.” They said there has never been competition between the U.S. and Chinese shipbuilders, noting that for 14 consecutive years, China has completed the greatest number of ships worldwide. Furthermore, they highlight that Chinese shipbuilders now account for 50 percent of the yearly global orders.
The U.S. Trade Representative is set to schedule hearings and solicit comments promising a thorough review of the filing made by the U.S. unions. China said it would “pay close attention to the progress of the investigation and will take all necessary measures to resolutely defend its rights and interests.”
US to Investigate China's Shipbuilding as Biden Calls for New Steel Tariffs
President Joe Biden and the U.S. Trade Representative confirmed today that they are initiating an investigation into China’s shipbuilding practices. News of the investigation comes as President Biden and the White House will tell steelworkers that they are also calling for a tripling of tariffs on Chinese steel and aluminum. He is also promising to block efforts by China and others to circumvent U.S. restrictions by importing products through Mexico.
The White House said the administration recognizes the growing concerns that unfair Chinese trade practices, including flooding the market with below-market-cost steel, are distorting the global shipbuilding market and eroding competition. While highlighting that the U.S. trade deficit with China is the lowest it has been in a decade, the administration is also accusing China of unfair competition saying China is undercutting U.S. products with artificially lower-priced alternatives. They cite the critical nature of steel in U.S. commercial and naval shipbuilding calling steel the backbone of the American economy.
The concerns over China subsidies and state control of the shipbuilding industry were outlined in a petition to the U.S. Trade Representative from five labor unions. Filed in March, the unions formally requested an investigation into Chinese acts, policies, and practices in the maritime, logistics, and shipbuilding sectors.
“The petition presents serious and concerning allegations of [China’s] longstanding efforts to dominate the maritime, logistics, and shipbuilding sectors, cataloging the PRC’s use of unfair, non-market policies and practices to achieve those goals,” said U.S. Trade Representative Ambassador Katherine Tai. The announcement marks the start of a process of comments and hearings into China’s shipbuilding programs and could see tariffs imposed on Chinese-built ships calling at U.S. ports.
Administration officials are saying that China accounts for more than half the world’s steel exports. They said the Chinese have created overcapacity with non-market investments in the steel and aluminum industries.
“The steel and aluminum industries face a significant challenge from Chinese exports which are among the most emissions-intensive products in the world,” the White House wrote in its briefing document. It accuses China of “distorting the global shipbuilding market and eroding competition.”
China’s commerce ministry responded immediately to the accusations saying the initiative was “full of false accusations, misinterpreting normal trade and investment activities.” They repeated the Chinese position that the U.S. administration is playing the “China card” for its political aspirations.
The White House cites over 30 anti-dumping and countervailing duties on steel-related products already imposed by the U.S. Department of Commerce. President Biden said he was not seeking a trade war, but said steps would be taken against countries and importers that flood the market with cheap products.
President Biden said they would also be working with Mexico to jointly prevent China and other countries from evasion of tariffs on steel and aluminum by importing products into the United States from Mexico.
Biden – and steelmakers – promise US Steel
will stay American
Reuters | April 17, 2024 |
Credit: US Steel
US Steel and Japanese buyer Nippon Steel said the Pittsburgh-based firm will remain an “iconic American company” even after a planned $14.9 billion takeover, echoing President Joe Biden’s promise to local steelworkers.
The two steel giants responded hours after Biden on Wednesday pledged that US Steel would remain a “totally American company,” repeating his opposition to the deal.
“And that’s going to happen, I promise you,” Biden told the supportive crowd during an event in Pittsburgh.
US Steel Corp has agreed to be bought by Nippon Steel for $14.9 billion, but the deal has been described as being on life support since the Democratic president announced his opposition last month.
“The partnership between US Steel and Nippon Steel is the right combination to ensure that US Steel remains an iconic American company for generations to come,” the steelmakers said in a joint statement.
“Its iconic name will be unchanged, and its products will remain mined, melted and made in America,” the statement said, adding that jobs and plants would be protected.
The partnership would also strengthen the US steel industry’s resilience against threats from China and support the “crucial” US-Japan alliance, the companies said.
Senators raise concerns over Nippon Steel’s China ties amid US Steel takeover bid
United States Steel shares closed down 2.9% at $39.13 on Wednesday. Nippon Steel shares were trading up 1.05% at 3,468 yen on Thursday morning in Tokyo.
Biden was in Pittsburgh ahead of November’s presidential election, and he used a visit to the headquarters of the United Steelworkers union to push for higher tariffs on Chinese metal imports and new investigations into their trade practices.
A senior administration official briefing reporters ahead of that announcement declined to say whether Biden would use the levers of government to block the deal from going through.
“Nothing new to add,” said the official, who declined to be named.
“Let’s keep US Steel in America,” a woman among the steelworkers shouted to Biden during a meet-and-greet.
“Guaranteed,” Biden replied.
(By Steve Holland, Costas Pitas, Mariko Katsumura, Susan Heavey and Trevor Hunnicutt; Editing by Caitlin Webber, Chang-Ran Kim and Tom Hogue)
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