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The Biggest Target Of Trump’s Tariffs Isn’t China — It’s Canada

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Will Racke Immigration and Foreign Policy Reporter
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President Donald Trump’s decision to levy across-the-board tariffs on steel and aluminum imports is ostensibly directed at serial violators of international trade rules, most prominently China.

Indeed, China, the world’s biggest steelmaker, regularly floods the U.S. market with cheap steel. The practice is called “dumping” — selling a product at a lower price in one country than in the exporter’s domestic market.

Trump has railed against Chinese dumping for years, and his promises to retaliate against Beijing were a key part of his populist economic platform. The president made good on that promise on Thursday, invoking a rarely used 1962 law that allows trade sanctions to protect industries critical to national security.

If Trump’s import taxes — 25 percent on steel and 10 percent on aluminum — are applied to all importers, they will impact many other countries far more than China. In fact, the country that will feel the sting of tariffs most is Canada, America’s second-largest trading partner.

Canadian steel accounted for 16 percent of U.S. steel imports as of September 2017, according to data from the Commerce Department’s International Trade Administration. China, by contrast, supplied about two percent of imported steel mill products, falling out of the top 10 importers of steel to the U.S.

When it comes to aluminum, China is a much bigger factor than in the U.S. steel market. It accounted for about $1.8 billion in aluminum imports in 2017, making it the fourth-largest exporter of aluminum to the U.S.

That was far below the amount of aluminum imported from Canada, which sent about $6.9 billion worth of aluminum to the U.S. market in 2017, according to Panjiva, a company that tracks global trade data.

So, though they are aimed at China and other countries the practice commodities dumping, Trump’s tariffs will likely fall hardest on an honest trading partner. Using such a blunt tool as across-the-board import taxes will punish good actors along with the bad, argues Bloomberg BusinessWeek economics editor Peter Coy.

“But laying down worldwide tariffs on steel and aluminum is the wrong way to counter China,” Coy wrote Friday. “The country is only the 11th-biggest exporter of steel to the U.S. and the fourth-biggest aluminum exporter. Trump’s tariffs will hurt U.S. allies such as Canada, the top source of foreign steel and aluminum, as much if not more than they will China.”

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Ottowa said on Thursday that any trade restrictions on Canadian steel and aluminum would be “absolutely unacceptable” and would invite retaliation.

“Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers,” Canadian Foreign Minister Chrystia Freeland said in a statement, according to CNN Money.

Pittsburgh-based Alcoa, one of the world’s largest producers of aluminum, acknowledged Chinese dumping practices, but said the problem should be addressed through targeted measures that don’t also hit honest U.S. trading partners.

“We believe vital trading partners, including Canada, should be exempt from any tariff on aluminum,” Alcoa said in a statement to CNBC. “The aluminum industry has an integrated supply chain and actions should not penalize those that abide by the rules. We will continue to work on solutions that create a level playing field and address Chinese overcapacity.”

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