Trump launches investigation into steel dumping

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US president Donald TrumpImage source, Getty Images
Image caption,
The president said the investigation had "nothing to do with China"

Donald Trump has launched an investigation into countries that export steel to the US, raising the prospect of new tariffs on imports.

It is designed to stop countries from flooding the US with artificially cheap steel and undercutting local suppliers.

China is most often associated with the practice but the president said it had "nothing to do" with Beijing. He said it was about protecting US security.

The news caused shares in US steelmakers to rise sharply.

However, Asian steelmakers also climbed as investors appeared to shrug off the news.

The US government has previously attempted to shield national steelmakers from cheap foreign steel through the World Trade Organization, but the Trump administration says this has had little impact.

Instead, its investigation will fall under the US Trade Expansion Act of 1962, which lets the president impose restrictions on imports for reasons of national security.

"Steel is critical to both our economy and our military," Mr Trump said. "This is not an area where we can afford to become dependent on foreign countries."

China is the largest national producer and makes far more steel than it consumes, selling the excess output overseas, often at subsidised prices.

But Japan and South Korea have also been accused of dumping in the past.

Image source, Getty Images
Image caption,
China has been accused of dumping its excess steel on world markets, undercutting local producers.

Commenting on the probe Wilbur Ross, the US Commerce Secretary, said Chinese exports now accounted for 26% of the US steel market.

He said exports had risen "despite repeated Chinese claims that they were going to reduce their steel capacity".

"The artificially low prices caused by excess capacity and unfairly-traded imports suppress profits in the American steel industry," the administration said in a statement.

Mr Ross said that if the investigation found the US steel industry was suffering from excess steel imports, he would recommend retaliatory steps that could include tariffs.

Mr Trump has been highly critical of China's trade practices in the past but has softened his tone of late as he seeks greater cooperation over North Korea.

Earlier in April, he said his administration would not label China a currency manipulator, rowing back on a campaign promise.

Mr Trump had previously accused China of suppressing the yuan to make its exports more competitive against American goods.

US steel stocks rallied on Thursday with the Dow Jones US Iron and Steel Index closing 5% higher.

But Asian steel stocks also climbed with Japan's Nippon Steel up 1.3% on Friday and South Korea's Posco gaining 2.5%.

Meanwhile China's Baoshan Iron & Steel Co, Angang Steel and Baotou Steel each gained around 0.3%.