News Analysis

WASHINGTON—When President Donald Trump’s steel and aluminum tariffs on all countries take effect on March 12, much of the conversation will center around their effectiveness in tackling China’s aggressive trade practices.

These tariffs are specifically aimed at Beijing’s persistent overproduction of cheap metals, which has long undermined companies around the world, including in the United States, and caused trade tensions.

On Feb. 10, Trump reintroduced a 25 percent tariff on steel imports and increased tariffs on aluminum imports to 25 percent from 10 percent. On March 11, the White House confirmed that these tariffs would apply to all countries, “with no exceptions or exemptions.”

For decades, China has been flooding the global market with cheap, heavily subsidized exports, putting producers in the United States and other countries at a significant disadvantage.

China is, by far, the world’s largest producer of steel, with nearly 1 billion metric tons of crude steel produced in 2024. Over the past two decades, China’s share of global steel production has seen a dramatic rise, jumping to 53 percent from 23 percent. This shift has led to a pricing imbalance, with China’s steel dominating the market and pushing prices lower across the globe.

In 2024, China exceeded 1 billion metric tons for the fifth year in a row, which is approximately 10 times the annual steel demand in the United States, according to the American Iron and Steel Institute (AISI).

China also plays a leading role in aluminum production. Over the past 20 years, China’s share of global aluminum production has skyrocketed to 58 percent from just 8 percent.

China’s growth in both the steel and aluminum sectors has been fueled by substantial state subsidies. The country produces far more than the global market demands, resulting in a massive overcapacity problem. This has allowed China to flood the market with cheap steel and aluminum, hurting American producers.

Beijing is subsidizing a wide array of industries that it deems strategically important, aiming to dominate global markets and drive competitors out of business. In addition to steel and aluminum, the communist regime in Beijing has heavily subsidized sectors such as electric vehicles and renewable energy.

Global trade strife has forced other governments to impose tariffs and anti-dumping duties on China. While China has vowed to curb domestic production through output restrictions, it has never followed through on these commitments.

In 2024, China exported nearly 111 million metric tons of steel, up by 22 percent from the previous year.

After launching the Belt and Road Initiative (BRI), the Chinese Communist Party (CCP) began to subsidize steel producers to build additional capacity outside of China, especially in Southeast Asian countries such as Indonesia, further distorting the global market.

Bipartisan Issue

Both the Trump and Biden administrations have accused China of dumping cheap steel on the global market. They relied on Section 232 tariffs, which allowed the United States to implement trade restrictions if imports are considered threats to national security.

Trump imposed a 25 percent tariff on imports of steel and a 10 percent tariff on imports of aluminum in 2018 during his first term under Section 232.

Over the past seven years, the 2018 tariffs have been gradually dialed back. Trump granted exemptions to allies such as Mexico and Canada, while President Joe Biden offered alternative solutions—exceptions, quotas, and tariff-rate quotas—to various trading partners.

This time, Trump seeks to broaden the Section 232 tariffs by removing all exemptions, placing more downstream steel and aluminum products in the tariff coverage, and “phasing out the specific product exclusion process.”

Due to existing tariffs, Chinese steel accounts for less than 2 percent of U.S. imports. Since China exports to other countries, some Chinese companies are circumventing U.S. tariffs through transshipments—routing goods through other countries.

Christopher Tang, a supply chain management professor at the University of California–Los Angeles, believes that China is using countries such as Vietnam to avoid the U.S. tariffs.

“They’ve done this by shipping steel products to Vietnam, where some minor value-added processes are done before sending them to the United States,” Tang told The Epoch Times in an interview in February.

China is also increasing its shipments of metals to countries in the Global South and Latin America, he said.

Economic Impact

The sectors most affected by the tariffs will be those that rely on metals, such as appliance manufacturers, carmakers, and construction. Aluminum is an essential material used in a wide range of products from beer cans and aircraft parts to foil, utensils, and electrical wiring.

Construction, for example, is the top demand industry, outpacing steel service centers and distributors, automotive, and machinery.

On the labor front, higher tariffs will protect jobs in the steel industry. At the same time, economic observers say that losses in other sectors might offset these gains.

According to S&P Global Ratings, the impact of steel and aluminum tariffs is “miniscule.” However, the indirect effect on other sectors that rely on these metals will potentially be large.

Economists at S&P predict that new tariffs could raise the price of imports by 0.34 percent, translating to a 0.04 percent boost to the personal consumption expenditure price index. With tariffs potentially reducing goods imports by 0.34 percent, the gross domestic product could edge up by 0.04 percent in the first year of the import duties.

The United States depends more on aluminum imports than steel.

In 2023, the United States produced 74 percent of its steel consumption and imported just 26 percent. Conversely, domestic companies produced 56 percent of the nation’s aluminum needs and imported 44 percent.

Canada is poised to bear the brunt of U.S. tariffs, as it is the largest supplier of imported steel and aluminum. More than half of America’s aluminum imports originate from Canada.

Other countries, especially Brazil, Mexico, and South Korea, could suffer as Trump plans to abolish exemptions and exceptions.

“Pursuant to his previous executive orders, a 25 percent tariff on steel and aluminum with no exceptions or exemptions will go into effect for Canada and all of our other trading partners at midnight, March 12th,” White House spokesman Kush Desai said in a statement on March 11.

The White House’s steel and aluminum tariffs have garnered a mixed industry reaction.

David McCall, president of the United Steelworkers International, lauded the administration’s efforts to contain global overcapacity but opposed tariffs on Canadian shipments entering the United States in a statement in February.

In a letter to President Trump, five organizations associated with the U.S. steel industry, including the AISI, applauded the administration for ending the tariff exclusion process and restoring 25 percent tariffs.

They say product-specific exemptions diminished the efficacy of Section 232 measures.

“The degradation of the Section 232 tariffs and out-of-control global excess steel production led to increases in steel imports and imports of downstream derivative products, once again threatening the viability of domestic steel producers and U.S. national security,” the letter reads.

Kevin Dempsey, president and CEO of the AISI, welcomed the new tariffs as a step toward addressing market-distorting practices.

“China disrupts world markets by subsidizing the production of steel and other products and dumping those products in the U.S. and other markets,” he said in a statement.

“In addition, Chinese steel exports to third country markets are also often further processed into other steel or downstream manufactured products that are then exported to the U.S. market.”