By Trevor Hunnicutt, Steve Holland and David Lawder
WASHINGTON/PITTSBURGH (Reuters) -President Joe Biden on Wednesday called for sharply higher U.S. tariffs on Chinese metal products as part of a package of policies aimed at pleasing steelworkers in swing state Pennsylvania, at the risk of angering Beijing.
While campaigning for re-election in the ‘Steel City’ of Pittsburgh, Biden aides said the US president proposed raising to 25% the tariffs imposed by his predecessor Donald Trump on certain Chinese steel and aluminum products.
“China’s steel companies don’t have to worry about making a profit,” Biden said as he visited the headquarters of the United Steelworkers union. “They don’t compete, they cheat and we’ve seen the damage here in America.”
The now-targeted products currently face a 7.5% tariff under a Trump-era policy under Section 301 of the U.S. Trade Code, an overhaul of which Biden launched in 2022. The proposed higher rate would apply to values over $1 billion. of steel and aluminum products, a US official said.
The Biden administration is also putting pressure on neighboring Mexico to ban China from selling its metal products indirectly to the United States.
At the same time, it is launching an investigation into Chinese trade practices in the shipbuilding, maritime and logistics sectors, which could lead to more tariffs.
The measures provoke a backlash from China at a time of already heightened tensions between the world’s two largest economies.
A spokesman for the Chinese embassy in Washington, Liu Pengyu, called the tariffs an “embodiment of unilateralism and protectionism,” adding that the U.S. government was “making the same mistake over and over again.”
Trump’s broader imposition of tariffs during his 2017-2021 presidency led to China retaliating with its own tariffs.
“No trade war,” Biden told reporters traveling with him. But Biden’s trade representative told Congress on Wednesday that there was a need for “decisive” action to protect electric vehicles from subsidized Chinese competition, and Reuters reported that the administration would also reinstate some solar tariffs.
Pennsylvania is one of six battleground states that will likely decide the rematch of the elections between Biden and Trump in November. The economy is among voters’ top concerns.
Officials said on Wednesday that the intervention was “targeted” and should not worsen persistently high inflation.
During an emotional speech in which he also referred to his son Beau, who died of cancer in 2015, Biden said Trump did not deserve to be commander in chief.
KEY VOTING BLOCK
Biden and his Republican opponent have each courted union leaders and workers in faded industrial centers that form a key voting bloc in Pennsylvania, Michigan and Nevada, all swing states.
The steelworkers union, which demanded the measures Biden is passing, endorsed him last month.
Biden gave the union another victory when he came out last month against a proposed $14.9 billion bid from Japan’s Nippon Steel to acquire US Steel Corp. to buy.
He doubled down on those comments on Wednesday, telling steelworkers, “I promise you” that the company will remain in American hands. US Steel shares were last down 1.4% at $39.74, paring earlier losses.
Both 2024 candidates have deviated sharply from the free trade consensus that once prevailed in Washington and was limited by China’s entry into the World Trade Organization in 2001.
Trump, who withdrew from the so-called Trans-Pacific Partnership trade deal in 2017, has proposed a 10% tariff on all imports when he returns to office.
China was the seventh-largest exporter of steel to the US in 2023, with net shipments of 598,000 tons, down 8.2% from 2022, according to US Census Bureau data collected by the American Iron and Steel Institute , an industry trade group.
Canada was the largest exporter to the US with 6.9 million tonnes, followed by Mexico with 4.2 million tonnes.
Domestic steelmakers shipped a net 89.3 million tons of steel in 2023, according to AISI data.
Any new tariffs on steel and aluminum would have to be approved by Biden’s trade representative, Katherine Tai, after completing a review of Trump-era tariffs.
The new duties would be in addition to the 25% Section 232 national security tariffs also imposed by Trump on steel and aluminum products and product-specific anti-dumping and anti-subsidy duties that often reach into the triple-digit percentages.
US Steel and AISI, the steel trade group, praised Biden’s actions on tariffs. The Can Manufacturers Institute said in a statement that the government is “not going far enough.”
A senior International Monetary Fund official, Era Dabla-Norris, urged the United States to work with its trading partners, saying open trade — not tariffs — was the right approach.
China’s economy grew by a faster-than-expected 5.3% in the first quarter, data showed on Tuesday, after the country turned to exports to support growth in the face of continued weakness in the real estate sector and the increasing debts of the local government. Beijing views Trump-era tariffs as discriminatory.
Officials said they expected Chinese exports to flood global markets, following concerns raised by Biden’s Treasury Secretary Janet Yellen during a trip to the country last week.
China exported 25.8 million tons of steel products in the first quarter, the highest for the period since 2016 and up 30.7% year-on-year, Chinese customs data showed.
