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Real steel
April 2018

A US Steel plant in Gary, Indiana, 1973: Trump betrays his senescence in his steel obsession (Environmental Protection Agency)

Steel production used to be a basic measure of industrial might. Sixty years ago — when many of the world’s leading intellectuals expected the Soviet Union to surpass the US in economic terms — they would routinely point to surges in Soviet steel production as another Gosplan triumph. When President Trump tweeted on March 2, “If you don’t have steel, you don’t have a country,” he was betraying his senescence as well as his prejudices.

The USA’s imposition of 25 per cent tariffs on imports of steel was the main measure so far implemented in the inward- and backward-looking “America First” mercantilism that was one theme of Trump’s presidential campaign. He believes that “trade wars are good, and easy to win”, and that “we must protect our country and our workers” because “our steel industry is in bad shape”. Senator Sherrod Brown of Ohio applauded his move, as — in Brown’s words — too many steelworkers lived “in fear that their jobs will be the next victims of Chinese cheating”.

So China — rather than the Soviet Union — has become the bogeyman and rival. As it happens, the US imports more steel from the European Union, Japan and South Korea, all of which are military allies, than it does from China. The impact of Trump’s protectionism will be greater for them and retaliation is inevitable, even if it will be largely token in character. And how much will the Chinese care?

The key point is that China’s industrialisation since the late 1970s has been so prodigious that the world market is a sideshow for much of its steel industry. In 2017 China’s steel production was over 830 million tons, compared with a world total of almost 1,700 million tons. About 100 million tons was exported, only a tiny fraction of it to the US. The second and third largest producers were far behind: Japan with 105 million tons and India with just over 100 million tons. The US came fourth, with 81.6 million tons. (Russia was next, at 71.3 million tons, which may be of interest to those nostalgic for Sputnik, E. H. Carr and that lot.)

These numbers show that the overwhelming purpose of Chinese steel production is to meet internal demand, not to smother foreign supply. Sure enough, the growth of steel-making capacity has been excessive and steel plants are being closed down, not least because of the pollution and environmental degradation that they cause. However, the notion that Trump’s tariffs will do much harm to China, and make “America first” again, is crazy. With US production less than 10 per cent of China’s, most of the Chinese industry would carry on as before if the US were to stop importing steel altogether.
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