China has retaliated against the tariffs imposed by the United States by proposing tariffs against US products including aluminium scrap.
US President Donald Trump last week imposed a 25% tariff on imports of steel into the US, and 10% on aluminium.
But now the Chinese Government has responded by issuing a public consultation on 128 products it intends to post an import levy on if the US tariffs are not withdrawn. While most of the products on the list are fresh food items and different types of steel pipe, the list also included a proposed 25% import tariff on aluminium scrap.
In a statement, a spokesperson for the Chinese Ministry of Commerce said: “According to the relevant provisions of the WTO’s Agreement on Safeguard Measures, China has formulated a list of suspension of concessions.
“If China and the United States fail to reach a trade compensation agreement within the stipulated time, China will exercise the right to suspend concessions for products mentioned in the first part. China will implement the second part list after further evaluating the impact of the US measures on China. China reserves the right to adjust measures based on actual conditions and will implement necessary procedures in accordance with relevant WTO rules.”
Aluminium scrap is included in the second part of the list, so its implementation is likely to be as a last resort.
But if China does impose a tariff on US scrap, it is highly likely that the country will look to UK and European destinations for material as long as it remains cheaper than US imports that will rise by 25% in value.
This is likely to make aluminium prices rise here as China will need a huge amount of aluminium scrap to replace what has been lost from the US.
In 2017, the US exported 820,000 tonnes of aluminium to China, which represented approximately 50% of China’s imports of the metal.
To put it into context, the European Union as the second largest exporter of aluminium to China sent just 231,556 tonnes.
With EU countries net exporters of aluminium scrap, rather than net importers, it seems unlikely the US would look to dump the metal here, but would look at other destinations in Asia for example. Or alternatively, material could be stored there until if and when tariffs are removed by the US.
In a statement, the US Institute of Scrap Recycling Industries warned that China could begin to look at imposing tariffs on other recycled materials from the US if a resolution cannot be found.
It said: “In 2017, the United States exported more than $1.1 billion worth of aluminium scrap to China, which has been in a positive trade balance for more than a decade. The Chinese Government’s announcement will impact this significant US scrap export, spurring concern that exports of additional scrap commodities could be impacted in future announcements.”