US Tightens Steel, Aluminum Import Rules To Curb China Tariff Evasion

The United States unveiled stricter rules Wednesday on steel and aluminum imports from Mexico, moving to prevent China-origin goods from avoiding tariffs.

The election-season actions by President Joe Biden's administration mark the latest in efforts to guard against excess industrial capacity in China, which Washington has warned could bring a flood of unfairly priced goods to other markets.

China accused the United States of "protectionism," denying talk of overcapacity in its steel and aluminum sectors.

Steel arriving via Mexico will qualify for duty-free benefits only if melted and poured in that country, or in the United States or Canada, White House National Economic Advisor Lael Brainard told reporters. Otherwise, they will face tariffs of 25 percent.

Aluminum imports from Mexico that contain primary aluminum smelt or cast in China, Belarus, Iran or Russia will also face a 10 percent tariff.

Mexico will require importers to provide information about the products' countries of origin.

"These actions fix a major loophole that the previous administration failed to address, and that countries like China use to avoid US tariffs by shipping their products through Mexico," Brainard said.

She charged that "Chinese steel and aluminum entering the US market through Mexico evades tariffs, undermines our investments and harms American workers in states like Pennsylvania and Ohio."

As Biden's reelection bid enters a critical stage, the president has been working to win over voters in swing states including Pennsylvania.

"China and other nations must not be allowed to exploit trade with our neighbors in order to avoid US trade enforcement," said Scott Paul, president at the Alliance for American Manufacturing.

But Liu Pengyu, spokesman of the Chinese embassy in the United States, criticized the argument of overcapacity as a "political tool" to "suppress the Chinese economy."

A senior US official conceded the latest measures are "forward-looking."

Nearly 90 percent of some 3.8 million tons of steel imports from Mexico is already melted and poured in either the United States, Canada or Mexico, an official said on condition of anonymity.

Similarly, of the 105,000 metric tons of aluminum from Mexico, 94 percent was smelted or cast in the three North American countries.

But officials maintained China was producing beyond domestic demand, saying excess capacity is bound to be exported -- potentially impacting other markets.

"These joint actions with Mexico will help to ensure the long-term viability of our steel and aluminum industries," said US Trade Representative Katherine Tai.

The Treasury's under secretary for international affairs, Jay Shambaugh, told an event in Washington that the United States is not alone in trying to combat negative spillovers from China's "non-market practices."

In May, the United States announced steep tariff hikes on Chinese imports including electric vehicles and semiconductors.