In an attempt to avert a trade war, Germany hoped the G20 steel summit this week in Berlin could lead to a breakthrough. German Economy Minister, Brigitte Zypries told reporters on Monday that the European Union would impose countermeasures if the United States opted to impose new tariffs.
The announcement came in the wake of President Donald Trump threatening to apply new taxes on steel imports, which is a large part of his “America First” agenda. Many around the world feared that this move could trigger a trade war with China and damage the growing world economy.
In their attempt to avoid the proposed unilateral trade measures, Germany, the current leader of the Group of 20 leading economies, invited all G20 members and a select few other countries to today’s (11/30/17) summit. The event concluded with Zypries saying delegates had agreed on the need to dismantle subsidies and do a better job sharing information on the capacity reduction process. However, she also said not all 30 countries could come to an agreement on how exactly to deal with the current steel overcapacity.
Chief Negotiator for the US trade representative, Jamieson Greer said that the summit agreed on the first steps but more work is needed. Since the main problems were not covered by the conference, he said the US would continue to react to market-distorting practices.
China is still under pressure from the United States and the European Union to cut subsidies on its state-owned steel companies, stop dumping cheap steel onto world markets and shutter more capacity in addition to the 100 million tonnes it has already eliminated. Unfortunately, assistant Chinese Commerce Minister Li Chenggang warned against a situation where China makes efforts to cut overcapacity while the rest of the world “Just watches.”
China is currently the world’s leading steel producer with an output of 800 million tons last year. Global overcapacity reached 750 million tons in 2016 with global output reaching 1.6 billion tons. President Trump has consistently taken a hard stance on Chinese steel overcapacity. He went so far as to launch an investigation into whether the issue was one of national security.
While not much has been solved at today’s summit, it is at least bringing the issue into the open which could be the first steps toward finding a solution. Many steelmakers in the US want the President to impose the tariffs he initially promised while critics say that the move could be a devastating blow to the world economy. Either way, Manufacturing Talk Radio will be keeping a close eye on the steel overcapacity situation so be sure to check back for more information.