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China warns of retaliation if US slaps penal duties on its steel, aluminium

17 February 2018

China has warned of retaliatory action if the Unites States opted to impose penal tariffs on steel and aluminium imported from China and that the US proposal to slap penal duties on Chinese exports have no economic basis.

China also said it retained the right to retaliate to any trade action that is biased and groundless.

The US recommendations, unveiled by the Commerce Department on Friday, aren't consistent with the facts, Wang Hejun, chief of the trade remedy and investigation bureau at China's Ministry of Commerce, said in a statement posted on its website.

Commerce secretary Wilbur Ross said the US may impose quotas on imports of aluminum and steel, including a tariff of at least 24 per cent on steel imports from all countries. Ross also said ''it wouldn't surprise us'' if the measures were challenged.

The commerce department's ''Section 232'' national security reviews of the two industries contained global tariff options of at least 24 per cent on all steel products from all countries, and at least 7.7 per cent on all aluminum products from all countries.

The US already has excessive protections on domestic iron and steel products, according to Wang. ''If the final decision impacts China's interests, China will certainly take necessary measures to protect its own rights,'' Wang said.

American steel companies and steelworker unions have been demanding that Trump keep his promise to protect the industry.

China's trade partners have complained for years that its industry unfairly benefits from state subsidies, and dumps its products on markets abroad. While China only accounts for about 1 per cent of US steel imports, it could challenge US action at the World Trade Organization.

China's commerce ministry said it would take necessary steps to protect its interests if the final decision affects China.

Trump authorised the probes under a 1962 trade law that has not been invoked since 2001. He has until 11 April to announce his decision on steel import curbs and by 20 April to decide on aluminum restrictions.

Ross emphasised that Trump would have the final say, including on whether to exclude certain countries, such as NATO allies, from any actions.

Rather than tariffs on all imports, Trump may opt for a more ''surgical'' approach, Ross suggested at a meeting with lawmakers this week.

On steel, for example, the president could go with the recommended option that would levy a tariff of 53 per cent on imports from 12 countries - a list that includes China, Russia, India and South Korea - but allow exemptions for allies such as Japan, Germany and Canada.

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