{"id":109297,"date":"2017-07-19T09:50:01","date_gmt":"2017-07-19T13:50:01","guid":{"rendered":"http:\/\/countingpips.com\/?p=109297"},"modified":"2017-07-19T09:21:34","modified_gmt":"2017-07-19T13:21:34","slug":"how-steel-became-us-security-concern-and-global-trade-war-threat","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/07\/how-steel-became-us-security-concern-and-global-trade-war-threat\/","title":{"rendered":"How Steel Became US Security Concern \u2013 and Global Trade War Threat"},"content":{"rendered":"
July 19, 2017<\/div>
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By Dan Steinbock<\/strong><\/p>\n

As the White House seeks to turn steel overcapacity into a national security matter, the issue is alienating not only China but America\u2019s NATO allies.<\/strong><\/p>\n

‘They’re dumping steel and destroying our steel industry, they’ve been doing it for decades, and I’m stopping it. It’ll stop,’ US President Donald Trump declared during a recent flight from the US to France.\u00a0\u201cThere are two ways: quotas and tariffs. Maybe I’ll do both,\u201d he added at the eve of his administration\u2019s first Sino-US\u00a0Comprehensive Economic Dialogue (CED), also known as Diplomatic and Security Dialogue (D&SD).<\/p>\n

Only days after China\u2019s US Ambassador Cui Tiankai warned the US on \u201ctroubling developments\u201d that could derail the bilateral relationship, US Commerce Secretary Wilbur Ross said he would present Trump a range of options to restrict steel imports on national security grounds \u2013 even as Europe\u2019s NATO leaders were already lobbying against the White House\u2019s steel efforts.<\/p>\n

Steel overcapacity as a national security threat<\/strong><\/p>\n

After the Trump-Xi Summit in early April, the US and China announced a 100-Day\u00a0Action\u00a0Plan\u00a0to improve strained trade ties and boost cooperation between two nations. \u201cThis may be ambitious, but it\u2019s a big sea change in the pace of discussions,\u201d Wilbur Ross said at the time.<\/p>

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Yet, barely two weeks later, President Trump issued a Presidential Memorandum, which directed Ross to investigate the effects of steel imports on national security on the basis of the Trade Expansion Act of 1962. If Ross determines steel \u201cis being imported into the US in such quantities or under such circumstances as to threaten to impair the national security,\u201d Trump is authorized to take actions \u201cto adjust the imports of the article and its derivatives so that such imports will not threaten to impair the national security.\u201d<\/p>\n

It was those actions that Trump alluded to in his recent statement, including imposing import quotas, license fees on imported goods, or negotiating more restrictive trade agreements.<\/p>\n

Since 2000, the global steel market has changed dramatically. Some two decades ago, world crude steel production was still about 850 tonnes annually. While North America, Europe and Japan \u2013 read: the G7 bloc \u2013 accounted for more than half of the total, China only 15 percent.<\/p>\n

Today, global steel production has almost doubled to 1,630 tonnes and China accounts half of the total, whereas the share of the G7 nations has halved to 25 percent. In the past, advanced economies were the key producers. Today, emerging economies spearheaded by China account for 70 percent of global steel production.<\/p>\n

That\u2019s the real reason for the calls for steel protectionism in the US and the EU in the past few years. But now Trump\u2019s latest effort is splitting even the transatlantic front.<\/p>\n

Divided Brussels and Washington, again<\/strong><\/p>\n

The issue is also dividing the White House. Trade hawks \u2013 including Trump\u2019s trade and industrial policy head Peter Navarro, trade representative Robert Lighthizer\u00a0and trade advisor Dan DiMicco, former CEO of US steel giant Nucor \u2013 are pushing for high import tariffs. In contrast, the more business-friendly former Goldman Sachs executives \u2013 Treasury Secretary Steven Mnuchin and National Economic Council\u2019s chief Gary Cohn \u2013 argue for restraint.<\/p>\n

As steel imports have suddenly become an issue of \u201cnational security,\u201d US Defense Secretary James Mattis has been dragged into the debacle. By mid-June, Europe\u2019s NATO leaders joined in as well. They launched an extraordinary lobbying campaign against an anticipated US crackdown on steel imports, which, they argued, would hit US allies more than China. Consequently, Mattis \u2013 not Ross \u2013 has been hearing the cases of apprehensive German and Dutch NATO leaders and passed on their concerns to the White House.<\/p>\n

In the Bush era, the transatlantic axis almost fell apart, thanks to a deep divide about security policy. Now, the same axis is being strained to the hilt by deep divides in economic, trade, climate, steel (read: security) policies.<\/p>\n

Washington\u2019s NATO allies do not buy the national security arguments. In Brussels, the mood is growing for retaliation if the Trump administration will walk the talk.<\/p>\n

As Ross seemed to be pushing for a trade war over steel in a closed-door meeting with Senate Finance Committee members, he did not put a time frame on his review’s release. Officially, he has 270 days to submit a report to Trump \u2013 which translates to anytime between soon and late fall.<\/p>\n

What next?<\/strong><\/p>\n

If Ross finds that steel imports threaten to impair national security, Trump must determine within three months whether he concurs with the Secretary\u2019s findings; and what actions should be taken.<\/p>\n

In practice, the White House\u2019s current goal was to ramp up \u201cAmerica First\u201d pressure at the eve of Trump\u2019s first Sino-US Dialogue. Theoretically, Ross and Trump can defer difficult decisions about steel only until early spring 2018.<\/p>\n

However, the Pandora\u2019s box has now been opened and an adverse decision could not just derail Sino-US bilateral relations, but alienate America\u2019s NATO partners and undermine much of past economic progress worldwide.<\/p>\n

About the Author:<\/strong><\/em><\/p>\n

Dr Dan Steinbock is the founder of Difference Group and has served as research director at the India, China and America Institute (USA) and visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see https:\/\/www.differencegroup.net\/\u00a0<\/a><\/p>\n

The original version was published by China Daily on July 19, 2017<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Dan Steinbock As the White House seeks to turn steel overcapacity into a national security matter, the issue is alienating not only China but America\u2019s NATO allies. ‘They’re dumping steel and destroying our steel industry, they’ve been doing it for decades, and I’m stopping it. It’ll stop,’ US President Donald Trump declared during a […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-109297","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/109297","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=109297"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/109297\/revisions"}],"predecessor-version":[{"id":109298,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/109297\/revisions\/109298"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=109297"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=109297"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=109297"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}