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U.S. puts tariffs on Chinese aluminum foil imports

by | 28 Feb, 2018

The Trump administration has placed tariffs on aluminum foil imports from China after trade experts in the government said the country’s producers are dumping the product in the U.S. market, undercutting American aluminum makers.

Tariffs will be from 49 to 106 per cent on foil in retaliation for the practice, with duties of 17 to 81 per cent on “unfair” subsidies Chinese producers receive. The duties, which would last 5 years, remain subject to a finding of injury to U.S. producers by the International Trade Commission, which is due to announce its findings and decision on the matter on March 15th.

In 2016, aluminum foil imports from the Asian superpower were valued at an estimated $389 million according to figures from the commerce department.

Wang Hejun of China’s Commerce Ministry said: “The U.S. has disregarded the WTO rules and seriously damaged the interests of China’s aluminum foil exporters. China is strongly dissatisfied with this”.

However, there is nothing in the WTO rules that says tariffs are illegal. The WTO website states: “The WTO is sometimes described as a ‘free trade’ institution, but that is not entirely accurate. The system does allow tariffs and, in limited circumstances, other forms of protection. More accurately, it is a system of rules dedicated to open, fair and undistorted competition.” Given that China has hurt U.S. companies (in particular in the steel industry) with cheap, subsidized foreign imports on a massive scale, many Republicans will be agreeing with Trump on this matter and argue that China does indeed distort competition in the market, even if they fear the potential fallout.

The WTO states that: “Lowering trade barriers is one of the most obvious means of encouraging trade. The barriers concerned include customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively.” However, given that Trump says he likes free trade as long as it’s fair and reciprocal, it’s unlikely a total import ban or similar restriction will be put in place.

Now we wait to see what happens next. It might not be pretty given that a trade war has already been brewing for over a year.

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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