Backlash against Chinese steel gives preview of Trump trade tensions
Subscribe to enjoy similar stories. China’s industrial overcapacity became an issue of global concern even before the election of Donald Trump. Now his threat to place tariffs of 60% or more on Chinese exports will elevate the issue even further.
There is perhaps no better example than steel to illustrate the problem. China is by far the biggest steel producer in the world, accounting for more than half of the world’s production. The country had been able to absorb a big chunk of steel with its booming construction and manufacturing.
But with the implosion of its housing market, sluggish domestic demand has given rise to excess supply for the rest of the world. Because of the sheer size of China’s steel industry—which produced around 1 billion metric tons last year—fluctuations in its domestic demand can send shock waves to the rest of the world. China’s net exports of steel reached a record 10.6 million metric tons in October.
In the first 10 months this year, China shipped 92 million metric tons of steel abroad. That is more than 10% of total steel production outside China, or more than what the U.S. produced for the whole of 2023.
Most of this cheap Chinese steel finds its way to the developing world, which is still fervently building up infrastructure or manufacturing industry. Vietnam, the top destination for China’s steel exports, imported 53% more steel from China in the first 10 months of 2024 compared with a year earlier. Exports to Saudi Arabia and the United Arab Emirates, which are undergoing a construction boom, also grew nearly 50% year on year.
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