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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