Trump edges closer to a trade war with China, and it's thanks to aluminum foil

U.S. President Donald Trump delivers remarks on opioid addiction and North Korea to reporters at Trump’s golf estate in Bedminster, New Jersey, U.S., August 8, 2017. REUTERS/Jonathan Ernst
U.S. President Donald Trump delivers remarks on opioid addiction and North Korea to reporters at Trump’s golf estate in Bedminster, New Jersey, U.S., August 8, 2017. REUTERS/Jonathan Ernst

The United States has decided to levy an import tax of up to 81 percent on shipments of aluminum foil from China, penalizing the country for what U.S. trade officials say are unfair subsidies of its products.

The decision could add to mounting tensions between the world’s two biggest economies over trade, as the Trump administration moves toward a tougher stance on Chinese trade violations.

A preliminary decision issued by the Commerce Department on Tuesday evening found that the products were receiving financial assistance from the Chinese government. It specifically levied so-called “countervailing duties” on four Chinese companies — ranging from an 81 percent import tax on exports from one business to a 17 percent tax on another.

Chinese companies not specifically named face a duty of 22 percent on products they export to the U.S. market.

The ruling still awaits a final decision from the department on Oct. 23, as well as a ruling by the International Trade Commission. In the meantime, the Commerce Department will instruct border officials to begin collecting the duties on the products.

The measure will cover the kind of aluminum foil commonly used in kitchens, as well as in product packaging, cookware and automobiles.

The Aluminum Association, a trade group, said it was “very pleased” with the finding.

“This is an important step to begin restoring a level playing field for U.S. aluminum foil production, an industry that supports more than 20,000 direct, indirect, and induced American jobs, and accounts for $6.8 billion in economic activity,” said Hedi Brock, the group’s president.

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The decision is a routine one, as the United States frequently sets duties on imports it believes are unfairly subsidized. But it takes on more importance now that the Trump administration is ratcheting up pressure on Chinese trade practices, said Chad Bown, a senior fellow at the Peterson Institute.

“This would happen under any administration. I think what’s interesting and useful about it though is that it does tie into this bigger aluminum and overcapacity issue,” said Bown.

The Trump administration frequently has criticized China for flooding global markets with ultracheap products and putting competing industries in the United States out of business. Many of China’s industries are owned or subsidized by the state, which means they can continue to pump out products even when it is not profitable to do so, economists said.

Trump spoke often on the campaign trail about cracking down on China’s trade abuses. But in the initial months of his presidency, he appeared to be willing to cut the Chinese more slack on trade in exchange for help with diplomacy goals, such as pressuring North Korea to abandon its nuclear weapons program.

“I explained to the President of China that a trade deal with the U.S. will be far better for them if they solve the North Korean problem!” Trump tweeted in April.

In more recent months, however, the president appeared to abandon that strategy, while simultaneously ratcheting up trade pressure on Beijing. The Chinese “do NOTHING for us with North Korea, just talk,” Trump tweeted July 30.

The Trump administration separately has been investigating the risk that imports of aluminum and steel pose to the country’s national security. The investigation is being carried out under a section of the 1962 trade law known as 232.

If the Commerce Department finds that imports are threatening America’s industrial base, that legal provision would allow the administration to impose sweeping tariffs or other restrictions.

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The president and Commerce Secretary Wilbur Ross had said that the first of those Section 232 investigations, into steel imports, would be concluded by the end of June. But the decision has been delayed, in part due to pushback from foreign allies and steel-using industries that might suffer.

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