The U.S. Commerce Department on Tuesday slapped steep import duties on steel products from Vietnam that originated in China after finding they evaded U.S. anti-dumping and anti-subsidy orders.
The decision marked a victory for U.S. steelmakers, who won anti-dumping and anti-subsidy duties against Chinese steel in 2015 and 2016 only to see shipments flood in from elsewhere. The industry has argued that Chinese products are being diverted to third countries to circumvent the duties.
The Commerce Department said it would apply the same Chinese anti-dumping and anti-subsidy rates on corrosion-resistant and cold-rolled steel from Vietnam that starts out as Chinese-made hot-rolled steel.
Although the product was processed in Vietnam to be made corrosion resistant or cold-rolled for use in autos or appliances, the Commerce Department agreed with the claims of American producers that as much as 90 percent of the product’s value originated from China.
The global steel industry is struggling with a glut of excess production capacity, much of it located in China, that has pushed down prices. A G20 forum last week failed to make significant progress toward a solution amid divisions between Beijing and Washington.
The Vietnamese-shipped cold-rolled steel will face combined preliminary U.S. anti-subsidy and anti-dumping duties of 531 percent, while the corrosion-resistant steel will face combined duties of 238 percent - more than high enough to shut both products out of the U.S market. Final duties are expected to be announced on Feb. 16.
The decision followed a European Union finding in November that steel shipments from Vietnam into the EU also circumvented tariffs.
The Commerce Department said that after anti-dumping duties were imposed on Chinese steel products in 2015, shipments of cold-rolled steel from Vietnam into the United States shot up to $295 million annually from $11 million.
The case stems from a petition filed in September by U.S. producers ArcelorMittal USA (MT.AS), Nucor Corp (NUE.N), AK Steel Holdings Corp (AKS.N) and United States Steel Corp (X.N) that alleged that Chinese producers began diverting their steel shipments to Vietnam “immediately” after the duties were imposed.
The industry is awaiting the Commerce Department’s recommendation from its study on whether steel imports pose a threat to U.S. national security and broad import restrictions should be imposed. Although the study has been largely completed, the recommendations have been delayed until Congress passes tax legislation.
By law, the Commerce Department’s findings are due by late January.