President Trump has imposed stiff penalties on imports of foreign steel. Longtime steel executive Joe Epstein has this Perspective on current conditions in the steel market and whether Trump’s tariff will work.
In the late 1950s, as part of his “Great Leap Forward” to convert post-war China to an industrial economy, Mao Zedong ordered communities to set up backyard kilns and rapidly increase steel production. The results were disastrous. The country turned out millions of tons of substandard steel.
Today, China – already the world’s largest producer of steel – is taking another great leap forward by doubling its steel production and creating a further glut on the world market.
And herein lies the main problem.
Currently, the U.S. has assessed China with anti-dumping penalties limiting their ability to sell to the U.S. With excess supply, China has found many ways to circumvent these penalties and penetrate the US market. For example, many of our foreign trading partners like South Korea and Vietnam buy low-cost steel from China and make products like pipe and tubing for export to the US.