US to Investigate China's Shipbuilding as Biden Calls for New Steel Tariffs

President Joe Biden and the U.S. Trade Representative confirmed today that they are initiating an investigation into China’s shipbuilding practices. News of the investigation comes as President Biden and the White House will tell steelworkers that they are also calling for a tripling of tariffs on Chinese steel and aluminum. He is also promising to block efforts by China and others to circumvent U.S. restrictions by importing products through Mexico.

The White House said the administration recognizes the growing concerns that unfair Chinese trade practices, including flooding the market with below-market-cost steel, are distorting the global shipbuilding market and eroding competition. While highlighting that the U.S. trade deficit with China is the lowest it has been in a decade, the administration is also accusing China of unfair competition saying China is undercutting U.S. products with artificially lower-priced alternatives. They cite the critical nature of steel in U.S. commercial and naval shipbuilding calling steel the backbone of the American economy. 

The concerns over China subsidies and state control of the shipbuilding industry were outlined in a petition to the U.S. Trade Representative from five labor unions. Filed in March, the unions formally requested an investigation into Chinese acts, policies, and practices in the maritime, logistics, and shipbuilding sectors.

“The petition presents serious and concerning allegations of [China’s] longstanding efforts to dominate the maritime, logistics, and shipbuilding sectors, cataloging the PRC’s use of unfair, non-market policies and practices to achieve those goals,” said U.S. Trade Representative Ambassador Katherine Tai. The announcement marks the start of a process of comments and hearings into China’s shipbuilding programs and could see tariffs imposed on Chinese-built ships calling at U.S. ports.

Administration officials are saying that China accounts for more than half the world’s steel exports. They said the Chinese have created overcapacity with non-market investments in the steel and aluminum industries.

“The steel and aluminum industries face a significant challenge from Chinese exports which are among the most emissions-intensive products in the world,” the White House wrote in its briefing document. It accuses China of “distorting the global shipbuilding market and eroding competition.”

China’s commerce ministry responded immediately to the accusations saying the initiative was “full of false accusations, misinterpreting normal trade and investment activities.” They repeated the Chinese position that the U.S. administration is playing the “China card” for its political aspirations. 

The White House cites over 30 anti-dumping and countervailing duties on steel-related products already imposed by the U.S. Department of Commerce. President Biden said he was not seeking a trade war, but said steps would be taken against countries and importers that flood the market with cheap products.

President Biden said they would also be working with Mexico to jointly prevent China and other countries from evasion of tariffs on steel and aluminum by importing products into the United States from Mexico.