Biden makes trade play for steel workers

The Biden administration on Wednesday will propose hiking tariffs on Chinese steel and aluminum as part of a package of actions aimed at penalizing Beijing and winning the votes of steel workers and other industrial employees this November.

President Joe Biden during a speech at the United Steelworkers union headquarters in Pittsburgh will request that his U.S. Trade Representative triple Trump-era tariffs on steel and aluminum imposed to combat China’s subsidies.

The result could be tariffs nearing 50 percent for Chinese steel and over 30 percent for aluminum when combined with separate tariffs former President Donald Trump slapped on the metals for national security reasons. But the actual impact of the tariffs could be minimal, because of a precipitous drop in Chinese metal shipments to the U.S. after Trump imposed his duties.

The moves are designed to play well in key Midwest states where Biden is fighting for blue collar votes Trump won over with an anti-trade message in 2016. Earlier this year, Biden announced he would oppose the takeover of iconic Pittsburgh-based metals firm U.S. Steel by a Japanese rival, aligning himself with the United Steelworkers union, which also opposes the transaction and endorsed him soon after.

Despite billing himself as the most union friendly president in history, Biden is still fighting for support from rank and file union members. A recent NBC News poll found that the president’s margin of support from union-household voters slipped from where it was in the 2020 election.

To shore up support, Biden will reiterate his opposition to the U.S. Steel deal during his speech to the union, senior administration officials said. In addition to the tariff announcement, the president will also direct USTR to open an investigation of China’s shipbuilding industry that could result in new tariffs on Chinese ships, and direct his administration to work with the Mexican government to ensure that China cannot evade tariffs by shipping steel and aluminum through Mexico — both actions requested by the steelworkers union.

The actions are meant to protect U.S. workers from Chinese industries the administration says benefit from unfair subsidies and state support meant to boost exports and support China’s flagging economy. Those policies threaten to undercut U.S.-made steel and other industries, administration officials told reporters late on Tuesday.

“In manufacturing sectors like steel, China’s already producing more than China or the world can easily absorb,” Lael Brainard, director of Biden’s National Economic Council, told reporters. “China’s subsidies and other forms of support lead to exports flooding global markets at artificially low prices, undercutting American steel that is cleaner.”

In technical terms, Biden’s tariff request will ask USTR to triple tariffs imposed to combat China’s industrial subsidies — from 7.5 percent to 22.5 percent — as part of its ongoing review of Trump-era tariffs meant to counter China’s discriminatory trade practices. Those duties would be added to national security tariffs — 25 percent on Chinese steel and 10 percent on Chinese aluminum — that remain in place.

Administration officials said the tariff levels are designed to make American producers competitive with their Chinese rivals.

“If you look at prices, China’s export prices are 40 percent lower than U.S. steel prices,” a senior administration official said. “Therefore, it’s important that these new tariffs — if enacted — provide a more level playing field against China’s unfair trade practices on steel and aluminum.”

However, they also said they did not expect the move to boost inflation since Chinese steel imports currently account for only 0.6 percent of U.S. steel consumption.

While Biden’s tariff move is technically a request of USTR, the conclusion is all but foregone. The U.S. Trade Representative’s office has been conducting a review of the Trump-era tariffs for over a year, and would have to submit the results of that review to the White House before acting anyway. U.S. trade chief Katherine Tai told lawmakers on Tuesday that the review is expected to be completed “soon,” but declined to offer more detail.