U.S. Steelmakers Seek Antidumping Action Against China and four others

Six steelmakers with major U.S. operations filed a trade complaint on Wednesday seeking punitive tariffs for alleged unfair pricing of imported steel from China, India, Italy, South Korea and Taiwan. The steelmakers are United States Steel Corp., Nucor Corp., Steel Dynamics Inc.,ArcelorMittal USA, AK Steel Corp. and California Steel Industries. All are based in the U.S. except ArcelorMittal, the world’s biggest steelmaker, which is based in Luxembourg and London but owns big mills in Indiana and elsewhere in the country.

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The suit, which concerns a common kind of coated steel used in automobile and construction industries, is the first salvo in the campaign this year by the beleaguered U.S. steel industry to protect itself against a record flood of imports.

The petitioners are frustrated because prices have been sluggish—down about 25% since the start of the year—despite strong demand. That has forced the companies, which make most of their steel near auto factories in the Midwest and South, to lay off thousands of workers and idle plants around the country.

They blame imports, particularly from China. Slowing demand in that country has led its steelmakers to export excess capacity, flooding global markets. Exports of steel from China rose 36% to 30.4 million tons during the first four months of the year.

The United States International Trade Commission must decide within 45 days whether the business of U.S. producers was sufficiently “injured” to merit duties. The Department of Commerce will issue a preliminary ruling by the end of 2015. Final rulings by both agencies are due by mid-2016.

The U.S. last year slapped duties on imports of steel used in the energy industry from South Korea and five other countries. Those duties haven’t stemmed the tide of shipments.

To win this new case, the U.S. companies will have to prove that the foreign companies sold their steel at below-market prices or benefited from illegal state aid, and that these tactics allowed them to win market share in a way that damaged the profits of domestic steelmakers.

As we learned in the class, dumping is a kind of predatory pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price either below the price charged in its home market or below its cost of production. In this article, developing countries exports their steels at a very low price to U.S. in order to take the market power of steel industry in U.S. Whether it is good or bad, it is kind of strategy for the government to exports their products relatively to the TPP as we learned in the class.

In recent years, there are more and more anti-dumping news between U.S., Europeans and developed countries. Developing countries want to export their products to the world and want their products become more competitive. So they choose to decrease their prices in order to attract other buyers. This will some how cause lots of problems between international trade market and we will still keep looking on to find a way to solve that.

 

Resources:

http://www.wsj.com/articles/u-s-steelmakers-seek-antidumping-action-against-china-other-countries-1433353218

http://www.bloomberg.com/news/articles/2015-12-22/u-s-commerce-department-to-put-256-tariff-on-chinese-steel

http://www.zacks.com/stock/news/202254/us-levies-antidumping-duties-on-corrosionresistant-steel

http://www.industryweek.com/trade/us-opens-anti-dumping-probe-2-billion-steel-imports

 

 

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One Response to U.S. Steelmakers Seek Antidumping Action Against China and four others

  1. yililindsay says:

    Great Article about US antidumping on steel manufacture industry! This article shows a great example that government can use tariffs to protect an industry.
    You provide a clear logic that how a decreasing price driven down by the lower import price caused problems of unemployment and resources waste, which I suggest you can dig deeper to national welfare. I like your special focus on how US steelmakers fight to prove that importers from China and South Korea etc. sold their steel at below-market prices or benefited from illegal state aid. Through this discussion, the complicity of trade-off between free trade and tariff protection is brought onto stage.
    Also, you let us see tariff protection from the new angle of antidumping. Generally speaking, we talked about producers’ surplus and consumers’ surplus, and we care about how a government can design a balanced trade-off structure between the two and how to avoid deadweight loss. Now speaking of antidumping, I am wondering whether US government somehow quantitatively measured the increase in consumer surplus with this lower steel price or just stand on the side of producers’ side without hesitation. After all, comparative advantage is the source of benefits from trade, isn’t it?
    It is no doubt that dumping hurts domestic producers and it has been continuously rejected by the rules of international trade organizations. Hopefully, there can be a better way that antidumping will not be the excuse of low industry growth.

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