President Donald Trump on Thursday launched a trade probe against China and other exporters of cheap steel into the U.S. market, raising the possibility of new tariffs and sending shares of some U.S. steel makers up over 8 percent.
Citing concerns about national security, Trump made the announcement at a White House ceremony with U.S. steel executives from Nucor Corp (NUE.N), United States Steel Corp (X.N) and TimkenSteel Corp (TMST.N) alongside Commerce Secretary Wilbur Ross, a billionaire businessman who made part of his fortune investing in the steel business.
“Steel is critical to both our economy and our military,” said Trump, a Republican. “This is not an area where we can afford to become dependent on foreign countries.”
Trump won many votes in industrial states like Michigan and Pennsylvania with a pledge to boost manufacturing and crack down on Chinese trade practices.
China is the largest national producer and makes far more steel than it consumes, selling the excess output overseas, often undercutting domestic producers.
The unusual step of launching an investigation comes as Trump is pressuring China to do more to rein in an increasingly belligerent North Korea. When Chinese President Xi Jinping visited Trump in Florida earlier this month, Trump raised the possibility of using trade as a lever to coax China to do more.
“Everything they export is dumping,” said Derek Scissors, Asia economist at the American Enterprise Institute, a Washington think tank.
Ross cast the decision to initiate the probe as a response to Chinese exports of steel into the United States reaching the point where they now account for 26 percent of the U.S. market.