Canada Is Preparing Steel Quotas, Tariffs on China and Others

My guess is that Canada's action here, along with the EU, will be pretty influential, as China won't just be able to dump all their US-bound steel on those markets.

I don't necessarily disagree with the Trump administration's moves against Chinese economic behaviour here, but I do think that exemptions should have been made for Mexico, Canada and the EU at a minimum.

If this had been about getting China to play fair, and co-ordinated well with other major economies, I think this could have worked out pretty well. But it seems Trump's main goal here is domestic protectionism at any cost.

That's what happened when the US had a dispute with Brazil over cotton tarifs protection [0], or countless other trade disputes countries have with each other. Even recently there was a chicken dispute case with China [1].

That's not perfect in any way, and that's crazy slow, but doesn't seems worse than playing chicken run through twitter announcements. If the point was really to do something about China's trading behavior, I think it would be done through the WTO, and in particular it would need more buying from the other main countries.

[0] https://en.wikipedia.org/wiki/Brazil–United_States_cotton_di...

[1]https://www.reuters.com/article/us-usa-china-wto-chicken/uni...

Trade is like water: it takes the path of least resistance. These tariffs aren't aimed at hitting China, they're aimed at preventing the steel that China used to sell to the US instead being sold to Canada, crashing Canada's market of steel. Essentially, if China can't sell the steel directly to the US, they'll price it such that Canadian (in this example) steel consumers purchase it instead. Then, Canadian steel producers wind up getting punished by the US tariff on Chinese steel, because their prices are driven down due to the flood of excess product.

The WTO allows this as an exclusion to the 'most favoured nation' rules of the GATT, specifically under the anti-dumping agreements [1]. That is, whilst normally a country must present the same tariff on a given product to all other countries in the world (it cannot favour or punish any particular nation), if the nation believes it is going to suffer the effects of dumping from a particular market then it is entitled to raise tariffs equivalent against that specific market to protect against that.

This whole response to Chinese steel is largely due to their significant oversupply. They really rapidly expanded their steel production well above global requirements when they entered the WTO, well above what global demand dictated. In 2000, the worldwide industry was about 800 MT. Today, China alone does more than that and accounts for a full half of total worldwide production. As a result, Western steel production has buckled under crashing prices [2].

My take is that these actions are therefore largely politically protectionist in nature. They're aimed at protecting domestic industries rather than punishing China for any human rights issues. I highly doubt that this will cause the CCP to approach their human rights differently. Instead, I suspect they will redirect their attention to some other labour-intensive industry and try to gobble that up, as it will be their best way to offset the significant job losses that'll come from a cooling Chinese steel market. Specifically for the HN crowd, I think this will be the tech industry, as China talks about wanting to move up the tech chain - see their "Made in China 2025" policy [3].

If you are interested in this stuff, there's a very good podcast called "Trade Talks" [4] which discusses precisely this - the economics of global trade. Several episodes are about the US tariffs and their likely effects. They look back to previous examples, not just from the Great Depression but also more recently agricultural tariffs and how they affected South American exporters for example. I would highly encourage anyone who is interested in this topic to listen to at least a few of the episodes about tariffs.

Yeh, I've cited Wikipedia. It's late and I'm lazy

[1]: https://en.wikipedia.org/wiki/Dumping_(pricing_policy)#Anti-...

[2]: https://en.wikipedia.org/wiki/List_of_countries_by_steel_pro...

[3]: https://en.wikipedia.org/wiki/Made_in_China_2025

[4]: https://twitter.com/trade__talks

Edit: rights

He also has to prop up the real estate bubble:

"price rose 31 percent to nearly $202 per square foot. That's 38 percent higher than the median price per square foot in the U.S., where per-capita income is more than 700 percent higher than in China." https://www.bloomberg.com/view/articles/2018-06-24/why-china...

But I am not aware of any historical case where trade penalties have curbed human rights abuses.

On the other hand, if you look at south east Asia, you see a different pattern. As wealth and trade have increased, so have the lives of the people there improved. Not at all at once, and there are plenty of aberrations, but on the whole, little by little, things are getting better.

1. https://en.m.wikipedia.org/wiki/Smoot–Hawley_Tariff_Act

http://americastradepolicy.com/did-the-smoot-hawley-tariff-c...

> The economists argued that the tariff increases would raise the cost of living, limit our exports as other countries retaliated, injure U.S. investors since the high tariffs would make it harder for foreign debtors to repay their loans, and damage our foreign relations. Unfortunately, this is what happened.

> From 1929 to 1933 American exports declined from about $5.2 billion to $1.7 billion, and the impact was concentrated on agricultural products such as wheat, cotton and tobacco. As a result, many American farmers defaulted on their loans, which in turn particularly affected small rural banks.

Its interesting because I always thought the cause was central banks wanting to peg the dollar to gold, this is what I had gathered from reading Lord of Finances year ago. Perhaps I need to reread it?

Why? This is worse than working with the U.S. even with the tariffs. Furthermore, Canada is little more than a suburb of the U.S. as far as military projection; whose navy guards the Canadian ships if Canada flips the bird to the U.S?

> Canada needs to understand need of the hour is not to engage in moral-schooling with China and not to support ire-invoking causes in China -- our priority is Canada, Canadian economy and Canadians.

China is seizing Canadian property from Chinese people for political influence, I don't think this is the time to treat China with no suspicion.

> For too long our courting of USA and India has resulted in both US and India becoming arrogant towards us when it comes to foreign policy and diplomatic protocols.

> Finally, as a clear signal, Canada should step up border patrol and aggressively stop any intake of folks fleeing to Canada from USA - US needs to understand Canada is not a dumping ground for their unwanted folks.

This is pretty limited.

Seems you're ranting into the wind about nonsense.

You act as if ICE takes people it finds in the US, drives them to the Canadian border and tells them to walk north.

By far the largest source of Canadian steel imports is the US (55%). China accounts for only 10% of Canadian steel imports. Even if all the Chinese steel Canada imported (0.8 million metric tons) flowed directly into the US - highly unlikely - this would account for 2% of the steel the US imported (34.6 million metric tons). And this percentage is even smaller considering the overall US steel market. Hell - US production alone is 81.6 million metric tons and increasing. Somehow a max of 0.8 million metric tons destabilized a US steel market of approximately 81.6 mmt or more?

All numbers as of 2017 and from the US government:

[1] Canadian steel imports: https://www.trade.gov/steel/countries/pdfs/imports-Canada.pd...

[2] US steel imports: https://www.trade.gov/steel/countries/pdfs/imports-us.pdf