Transshipping Chinese Steel

All I heard yesterday on the news shows was that China supplies very little of our steel and tariffs were likely to only hurt our allies.  That is a bogus argument.

We already have tariffs on Chinese steel, (Somehow that seems to have gotten lost in the discussions), and in response to those the Chinese think they are clever by sending their surplus steel to other countries which then export to the US.  They got caught doing that with steel in Vietnam and aluminum in Mexico.  These are transshipping on a massive scale (6% of the market in aluminum held in Mexico) to avoid paying tariffs already in place on Chinese steel.   Sometimes they say they are doing it to have the steel treated in processes that could be done more cheaply in China, but can’t be and still maintain this farce.

In a world market, any metal is a zero sum game.  The Chinese oversupply, and keep prices down.  They subsidize growing mills that should have been closed years ago.  The prop up companies that use steel and aluminum because they are state owned, so they keep their prices down and compete unfairly in all kinds of markets that use these metals.  All of that product gets into the world market and keeps prices low, while increasing dependency on subsidized metals coming out of China.  Every country in the world knows what is going on but wants to pretend that this is a good thing for world trade.  It isn’t.  It is a good thing for Chinese trade, but given the volume of steel they produce, I wonder if that is even true anymore.  It must be an expensive game to play.  The US wants to make it even more expensive to play.