The Trump administration took unusual action against what it said were unfair Chinese trade practices on Tuesday, dusting off a weapon last used in 1991 and announcing two investigations into the pricing of aluminum products imported into the U.S.
But the actions — though highly symbolic — had been widely expected for Trump who accused China of “raping” the U.S. economy during the presidential campaign and threatened to label the country a “currency manipulator.”
“President Trump made it clear from day one that unfair trade practices will not be tolerated under this administration,” Commerce Secretary Wilbur Ross said on a conference call with industry executives. “Today’s action shows that we intend to make good on that promise to the American people.”
Ross said that the Chinese government has subsidized excess production of common alloy aluminum sheets, flooding the U.S. market with products that are sold well below fair value.
The flat-rolled aluminum sheets are used in items such as gutters, street signs and electrical boxes.
Such investigations, which have risen 65 percent this year, typically begin following a complaint from an affected U.S. industry. But Ross said he took the first step in the face of evidence that U.S. producers were “suffering injury” because of the Chinese practices.
Tuesday’s actions may signal the move from rhetoric to action that Trump’s supporters have craved.
“The act of starting the investigation itself — and not waiting for the U.S. aluminum industry to request it — is another signal that the Trump administration is eager not only to impose trade protection, but also to confront China,” said Chad Bown of the Peterson Institute for International Economics.
China could view the Commerce Department action as a deliberate escalation of trade tensions and impose its own trade barriers against U.S. companies, he said.
The Commerce Department investigations could lead to the imposition of duties designed to compensate for Beijing’s subsidies and prices that may be 56.54 to 59.72 percent below fair value, the department said.
Ross said that he anticipated further complaints from U.S. industries bruised by Chinese trade practices and he invited executives on the call “to come forward so that Commerce can defend against such inequities.”
Today’s announcement is permitted under World Trade Organization rules. But China is likely to complain about any eventual duties since Commerce will judge it as a “nonmarket” economy, despite Beijing’s long-standing insistence that the state no longer determines prices.
Final decisions in the both investigations are expected in late 2018.
For all his tough rhetoric on the campaign trail, Trump struck a conciliatory tone during his recent Beijing trip, praising Chinese President Xi Jinping and blaming his White House predecessors for the U.S. trade deficit with China.
And for all its symbolism, Tuesday’s action was limited to just $603.5 million in imports of one product. The administration is evaluating a host of other measures that could have far more serious repercussions for the $577 billion in two-way U.S. trade with China, the world’s second largest economy.
Administration officials are weighing whether to invoke national security considerations to combat rising Chinese steel and aluminum imports more broadly, a move that trade analysts fear could trigger a wave of similar measures by U.S. trading partners.
U.S. Trade Representative Robert E. Lighthizer also is investigating whether the U.S. should crack down on China’s technology transfer and intellectual property policies for unfairly discriminating against U.S. companies.
The U.S. has long complained about Chinese overcapacity in key industries. Through energy subsidies and cheap loans, Beijing has encouraged the growth of far more aluminum and steel production than it can use at home.
From 2011 to 2015, Chinese aluminum production doubled, eventually accounting for more than half of total global production. That led to sharp declines in world prices, the outgoing Obama administration reported in January.
In recent years, U.S. and Chinese officials repeatedly discussed potential remedies for the excess aluminum including at a September 2016 summit between Chinese President Xi Jinping and President Obama.
Tuesday’s move left some analysts wondering whether the administration’s goal is to persuade China to change the policies that are allegedly damaging U.S. companies or simply to shield an embattled Rust Belt industry from foreign competition.
“For this administration, protection may be an end in itself,” said Edward Alden of the Council on Foreign Relations.