Given the vicious downward spiral of competitive devaluation that is washing around the world’s economic bathtub, it appears – just as we saw during The Great Depression – that currency wars have given way to mal-investment-fueled protectionism as US launches the first missile in the trade wars with a massive 266% tariff on imports of cold-rolled steel. “There’ll be a short-term benefit,“ said John Packard of Steel Market Update. ”However, in the long run, the U.S. mills are always going to want more tariffs, and it’s questionable how much more [protection] they can get.”
In December, we warned of China’s flooding the world with its unwanted commodities – all created and warehoused in the biggest credit-bubble-fueled mass mal-investment “boom” in human history…as Bloomberg notes, shipments of steel, oil products and aluminum are reaching for new highs, according to trade data from the General Administration of Customs.
And then, as we explained, the dramatic over-production is exporting deflationary pressures all over the world, especially US Steel mills…
That’s because mills, smelters and refiners are producing more than they need amid slowing domestic demand, and shipping the excess overseas.
The flood of Chinese supplies is roiling manufacturers around the world and exacerbating trade frictions. The steel market is being overwhelmed with metal from China’s government-owned and state-supported producers, a collection of industry associations have said. The nine groups, including Eurofer and the American Iron and Steel Institute, said there is almost 700 million tons of excess capacity around the world, with the Asian nation contributing as much as 425 million tons.
And now, as The Wall Street Journal reports, The Department of Commerce Tuesday imposed preliminary duties on imports of cold-rolled steel, used to make auto parts, appliances and shipping containers, from seven countries including China, whose steelmakers were slapped with a massive tariff.
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